Commons Sitting of 8 April 1964

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  ISLE OF WIGHT RIVER AND WATER AUTHORITY BILL
  As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  ROADS

    Civil Engineering Works (Design Tenders)
    Mr. Ridleyasked the Minister of Transport if he will henceforth call for tenders for the design as well as the construction of civil engineering works.
    The Minister of Transport (Mr. Ernest Marples): No, Sir. I do not consider that tenders on a design and construction basis are suitable for road works in the conditions obtaining in this country.
    Mr. Ridley: Is my right hon. Friend aware that probably large savings could be made in the cost of major constructions if we had competition in design as well as in construction? Would not he go as far as doing a few experimental projects of this sort, as this is what is done in America with great benefit?
    Mr. Marples: There are many arguments for and against design and construction contracts, but most of the civil engineering work in my Department is confined to the construction of roads, where there is little scope for various designs. In some sorts of civil engineering work it might be desirable to allow contractors to put in alternative designs, but in respect of road work the scope is very limited.
    Mr. Ridley: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall endeavour to raise the matter on the Adjournment.

    M.2 (Farthing Corner Service Area)
    Mr. Burdenasked the Minister of Transport (1) what area is covered by, and what price was paid under a compulsory purchase order for, the land now occupied by the Farthing Corner service area on the M.2 motorway; and what price was paid for it by the company owning the service area;
    (2) what are the terms and conditions under which the land now occupied by the Farthing Corner service area on the M.2 motorway has been let or leased to the company operating the area; and what annual percentage return on the original purchase price paid by his Department this represents.
    Mr. Marples: The Farthing Corner service area covers approximately 18½ acres made up from parts of a number of plots. The approximate cost of the land, which my Ministry will continue to own, was £4,000. It will be leased to the company providing the facilities for a period of 50 years at a fixed annual rent and a percentage on turnover. The lease is lengthy and complicated. I will send a pro forma copy to my hon. Friend, but the financial details are matters of commercial confidence. In any case, it would be fallacious to compare the return with the bare cost of the land purchase.
    Mr. Burden: Is my right hon. Friend aware that I find his reluctance to give these figures rather extraordinary? Would not he agree that when land is acquired from farmers at or near the agricultural rate and is let to a private company, obviously at a figure based on the commercial activities of that company, it would be proper, right and equitable to ensure that the people who own the land should have the opportunity to carry out negotiations and reap some benefit from the profit of the private company, which is not the job of the Government?
    Mr. Marples: Regarding compensation, I am bound by the Act which this House passed. The effect of the Land

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    Compensation Act, 1961, and particularly Section 6, is that compensation for land acquired under the Highways Act, 1959, has to be related to the value of the land, without taking into account any increase or decrease in its value brought about by the creation of a motorway at public expense. Therefore, I cannot give compensation on any other basis than that laid down by Parliament. My hon. Friend must remember that so far about £15 million has been spent on the motorway, without which there would be no traffic or trade coming to that service area. That has been brought about by the expenditure of a large amount of public funds. We are spending £170,000 on works in the service area, on levelling, drainage and the construction of vehicle parks and through roads, and so on. Without that expenditure there would be no value.
    Mr. Burden: Will my right hon. Friend admit that this brings no comfort to people who so lose their land and have their incomes, as happened in the case of this small farmer, cut by 20 per cent.? Is it not time that the whole matter was looked at again? Surely my right hon. Friend will agree that if this argument is right the Government would have the power and the right to acquire land anywhere where they drive a road through land on which they think they can make a profit?
    Mr. Marples: I hope my hon. Friend will acquit me of any of the guilt, as he calls it, in this respect. Parliament discussed at great length before it passed the Act of Parliament and laid down the terms and conditions which I must keep to. What Parliament had in mind when passing the Land Compensation Act, 1961, and the Highways Act, 1959, was that in those areas there would be no development at all but for the large expenditure of public funds.

    Pavements (Guide Lines)
    Mr. David Jamesasked the Minister of Transport whether he will seek powers to paint keep left guide lines on busy pavements to facilitate pedestrian movement in rush-hours.
    Mr. Marples: Highway authorities already have powers to do this. But previous experiments with a pedestrian keep-to-the-left rule proved unsuccessful.
    Mr. James: This is a continuation of the point made on the previous Question. As my right hon. Friend is aware, pedestrian self-discipline is practised with complete success in cities as far apart as Melbourne and Moscow. Would it not be to the general convenience, particularly during the rush-hours, if my right hon. Friend made a concerted effort to make people, in the pedestrian and not in the political sense, keep to the left?
    Mr. Marples: The question of keeping to the left is one for the county borough or local highway authority concerned. We have had experience of this sort. There was the Slough road safety experiment in 1957, when signs were used in an effort to persuade pedestrians to keep to the left, but that did not work. The majority either kept to the right or to the side nearest to the shop windows they wanted to look at. If any local authority wishes to try the experiment again, I shall assist, certainly in the constituency of my hon. Friend.
    Mr. James: Could not my right hon. Friend take this matter a little more seriously? We are the most law-abiding country in the world and this unquestionably would be for the universal convenience. Will my right hon. Friend try a little harder?
    Mr. Marples: My hon. Friend has misjudged me; I take this seriously. I have discussed it with RoSPA from the safety point of view and we have carried out experiments, but they have failed. If he can persuade local authorities in his constituency to carry out experiments, I will do my best to help them.

    Hull-Great North Road Communications
    Mr. Coulsonasked the Minister of Transport when he expects to receive the report of the consulting engineers he appointed in 1962 to inquire into road communications between Hull and the Great North Road; and if he will make a statement.
    Mr. Marples: I expect to receive the Report within two or three weeks. It is expected to be of wide scope. But the improvement of trunk road communications between Hull and the Great

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    North Road is important and I will reach conclusions as quickly as possible. I have made provision for some of the work in the last extension of the trunk road programme in this Report.
    Mr. Coulson: I thank my right hon. Friend for that reply. Is he aware that, in view of the urgency of this matter, there has been wide disappointment in Hull and East Riding over the length of time taken to produce the Report? Will he give an undertaking that, when it is received by him, he will arrange for publication of its salient points and urgent consideration of the principal recommendations?
    Mr. Marples: I can promise my hon. Friend that I shall move as fast as I possibly can. The Report was commissioned in order that we could decide the best means of carrying out the recommendations to provide first-class communication between Hull and the Great North Road. The question of timing depends on decisions to be made when examining the Report and on necessary statutory procedures.
    Sir L. Ropner: Has my right hon. Friend informed the consulting engineers of the importance attached to the fact that their recommendations should include the freeing of Selby Toll Bridge?
    Mr. Marples: I have not drawn that to their attention, but I have no doubt that they will see this Question when it appears in HANSARD.

    Parking (Residential Areas)
    Mr. Dudley Smithasked the Minister of Transport, if he is aware that parking problems in residential roads and streets of the Greater London area are increasing; and what proposals he has for easing the road safety hazard on minor roads in this area.
    Mr. Marples: I am aware that the number of vehicles parked on the streets is increasing. Vehicles parked in minor roads are a much less serious hazard than those parked in main thoroughfares, and it would be wrong to prohibit parking there generally. But my right hon. Friend the Minister of Housing and Local Government and I intend to publish as soon as possible bulletins giving guidance to local
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    authorities about parking firstly in town centres and subsequently in residential areas.
    Mr. Smith: Is my right hon. Friend aware that when cars are parked solidly on both sides of side-streets passing traffic has great difficulty in getting through? This presents a tremendous hazard to pedestrians, particularly children. Police largely ignore this because they are only too willing to keep cars off the main roads. Is not the only possible way of solving the problem massive expansion of off-street parking outside the London area, and will my right hon. Friend make prompt recommendations to the local authorities?
    Mr. Marples: This bulletin will call attention of the local authorities to the necessity of action on their part to provide such off-street parking as is required in these local areas. Providing parking facilities in local areas requires local knowledge and decisions, and it is not appropriate for the central Government to decide the details of what should be provided in this way. I am calling the attention of the local authorities to the importance of off-street parking, and I am making a number of suggestions on how the job should be tackled.
    Mr. Manuel: Is the right hon. Gentleman aware that this problem is greatly aggravated by the parking of commercial vehicles night after night in residential areas because there is no garage provision for them? Does he intend to allow this greater freedom for owners of commercial vehicles to continue for all time?
    Mr. Marples: I have mentioned this matter in the House previously. Local authorities should provide parking facilities for these heavy vehicles which sometimes stay overnight and which should be parked off the streets. Several of these hive already been successfully started and more will be planned. Again, attention will be drawn to this in the circular.

    Road Vehicles (Segregation)
    Mr. Wingfield Digbyasked the Minister of Transport whether he will conduct an experiment into the segregation of similar types of road vehicles on

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    a given stretch of road by excluding other types.
    Mr. Marples: This idea is attractive, but putting it into practice poses formidable questions of safety and other traffic problems. I am exploring the possibility in London of segregation to give priority to buses in addition to the priority already given by exemption from some right turn bans.
    Mr. Digby: Is it not a fact that one of the reasons for the congestion is the mixing of vehicles of different speeds on our roads? Since my right hon. Friend will not enforce a minimum speed limit, does not this seem to be a way of tackling this problem, as has been done successfully in countries like Sweden?
    Mr. Marples: Separate carriageways for different classes of vehicles which would provide for overtaking would involve extremely wide and expensive roads. While, in theory, this proposition sounds attractive, when we get down to the details of the matter it becomes very formidable indeed.

    Footpaths (Maintenance Vehicles)
    Sir B. Jannerasked the Minister of Transport whether, in connection with the enforcement of maximum weights for vehicles used henceforward for the maintenance of footpaths, it is intended that vehicles which carry surfacing material such as tarmacadam will be weighed with or without their load of surfacing material.
    The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): The regulations relate to the gross weight of vehicles which includes the weight of any material carried.
    Sir B. Janner: Is the Minister aware that this will place considerable difficulty in the way of the proper repair of these footpaths? Has he not received complaints with regard to this matter from the various authorities, and what is he going to do about them?
    Vice-Admiral Hughes Hallett: The hon. Gentleman puts me in a slight difficulty, because I think he has anticipated his own Question which is next on the Order Paper.
    Sir B. Janner: I am sorry that the Minister should have been in difficulty, because I would have been very pleased for him to have answered them together.
    Sir B. Jannerasked the Minister of Transport when he proposes to discuss with the highway authorities the steps that can be taken to overcome the difficulties anticipated by them in connection with the operation of Statutory Instrument, 1963, No. 2126, dated 19th December, 1963.
    Vice-Admiral Hughes Hallett: The meeting was held between officials of the Ministries of Power and Transport and representatives of the associations of local authorities concerned on 20th March.
    Sir B. Janner: What is the hon. and gallant Gentleman proposing to do about it after having had that meeting? Has he any suggestions to make to deal with the situation?
    Vice-Admiral Hughes Hallett: The procedure for dealing with applications to the Minister of Power for relaxations under the present regulations was discussed and it was agreed that officials should prepare a draft amendment to the regulations which would allow local authorities, after consultation with the appropriate gas board, to use vehicles exceeding one ton in weight on footpaths.

    A.64 (Cycle Track)
    Mr. Turtonasked the Minister of Transport what has been spent in the last three years on the resurfacing of the cycle track on the A.64 between York and Malton; and what was the number of cyclists found to be using the cycle track at the last traffic census.
    Vice-Admiral Hughes Hallett: Over the last three financial years, expenditure on resurfacing the cycle track was £122, £67 and £6,000, respectively. At a census taken over one week in August 1961, 214 cyclists used the westbound track and 240 cyclists used the eastbound track.
    Mr. Turton: Is my hon. and gallant Friend aware that this cycle track has now been down for 25 years and has really been very little used? Will he consider whether it is economical to spend fairly large sums on maintaining

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    a track which is unused for most of the year, and would it not be better to convert it into a footpath?
    Vice-Admiral Hughes Hallett: This is always one of the considerations which we have in mind. I would point out that although cycle tracks are not widely provided these days, they still have considerable road safety value in certain circumstances. Where they have already been provided we want to be quite sure that their present value is negligible before removing them. In this instance it was decided that the tracks still have some value despite the rather low volume of cyclists using them.

    Summit Bridge, Smethwick
    Mr. Gordon Walkerasked the Minister of Transport what action he is taking to make the Summit Bridge, Roebuck Lane, Smethwick, less dangerous for pedestrians and road traffic.
    Vice-Admiral Hughes Hallett: The re-alignment of that length of Roebuck Lane which includes Summit Bridge has been included in the provisional list of schemes for the classified road programme 1965–68.
    Mr. Gordon Walker: Provisional? Does the hon. and gallant Gentleman realise that this is probably one of the most dangerous bridges in the land? It has a kink in the middle so that traffic one way cannot see the traffic coming the other way. It has one pavement 6½ ins. wide and another 12 ins. wide. There has recently been a fatal accident It is a miracle that there have not been others. Does not he agree that this is a case where measures should be taken, it necessary temporary measures, to remove an extremely dangerous hazard to traffic? I counted 10 or 12 cars passing there every minute. There were both vehicle traffic and pedestrians.
    Vice-Admiral Hughes Hallett: What the right hon. Gentleman says is correct. But the first thing for us to do is agree with the highway authority a definite programme for the works which are to be undertaken. It may well be that the gap between making any temporary arrangements and the completion of the new scheme will be very short indeed.

    School Entrances (Parking)
    Mr. Wallasked the Minister of Transport whether he will introduce legislation to increase the powers of local authorities to restrict parking outside school entrances.
    Mr. Marples: No, Sir. Their powers are already sufficient.
    Mr. Wall: Is my right hon. Friend aware that his Ministry circular last summer pointed out that two accidents out of five to children are caused because of masking of the road by parked cars? Would he study the roads around West-minster, the part not coveted by parking meters, and then he may discover how very difficult it is for children to see when crossing the road, and will he then take further action?
    Mr. Marples: A school entrance carriageway marking is available and local authorities can put it down at suitable places. The idea exists and the carriageway can be marked so that parked cars will not mask the entrances and exits of schools. I agree that in certain cases they ought to be marked. If my hon. Friend has a particular case in mind where he thinks that action can be taken, I should be very grateful if he would let me know.

    Road Signs (Homes for Disabled)
    Mr. Frank Allaunasked the Minister of Transport if he will reconsider his refusal to erect signs advising drivers of the proximity of homes for blind, disabled and aged people.
    Mr. Marples: I do not consider that signs warning drivers about these homes are a reliable safety measure. Even so I am very concerned about the difficulties of pedestrians and especially of those who are old or handicapped and their needs are being given special consideration in the current review of crossing policy. But much their best protection is an escort
    Mr. Allaun: Is the Minister aware that a letter from his Ministry to the Manchester and Salford Blind Aid Society says that notices are best placed within the grounds of such homes? Is that not far too late to warn drivers? Is he aware that the letter also uses as

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    an argument the fact that blind people do not cross the road at regular times? Surely this is all the more reason for such a notice. It seems daft to me.
    Mr. Marples: All I can say is that the superintendent and secretary of the Manchester and Salford Blind Aid Society wrote to me suggesting that blind people from the homes themselves feel that for them to put their faith in signs which are for sighted motorists is ridiculous and that blind people would never dream of crossing Eccles Old Road without help. I am sure that all would wish to give assistance to the elderly and blind when crossing the roads. The only point of dispute is on the right way to do it—whether by proliferating signs for sighted motorists or whether by providing care and attention for blind persons when crossing the road.

    Long Distance Traffic (Routes)
    Mr. Duffyasked the Minister of Transport what steps he proposes to take to encourage the drivers of long-distance and other forms of through-traffic to use by-pass routes where provided.
    Vice-Admiral Hughes-Hallet: We hope that the new directional sign posting recommended by the Worboys Committee will help to do this.
    Mr. Duffy: Is the hon. and gallant Gentleman aware that the internal areas of some towns which have been by-passed at tremendous public expense are still snarled up at rush periods by some forms of through traffic and long-distance traffic? Is not some research now required to find out why such drivers are reluctant to take advantage of some of the new by-pass routes?
    Vice-Admiral Hughes Hallett: I agree with the hon. Gentleman. This matter is the subject of a great deal of study. In cases where there is a ring road, there is no difficulty at all; but in cases where the by-pass is on only one side of the city it may well be necessary, for the sake of connecting with a primary road entering the city on the side which is not by-passed, for through traffic to go into the centre.
    Mr. Costain: Is my hon. and gallant Friend aware that there is considerable concern in Kent on this matter? Since
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    the opening of the Medway by-pass, a number of heavy lorries, particularly private lorries, are using the main town. The view in Kent is that Whitehall may plan but that tea houses are more attractive than Whitehall's planning. Would he consider more tea houses being built on by-passes?
    Vice-Admiral Hughes Hallett: I do not think we can undertake the building of tea houses, but I will certainly look into the other point raised by my hon. Friend.

    Westfield Lane, Mansfield
    Mr. B. Taylorasked the Minister of Transport if he will state the nature of the reply sent by his Department to the Mansfield Town Council in reply to the town clerk's letter of 11th February, 1964, respecting the widening and improvement of Westfield Lane, Mansfield.
    Vice-Admiral Hughes Hallett: The Council has been informed that the scheme for the widening and improvement of Westfield Lane at a cost of £40,500 has been included in the classified road programme for 1965–66. Subject to approval of the details and the agreement of Nottingham County Council, grant will be available in that year.
    Mr. Taylor: Is the Minister aware that I am disappointed with the date, although grateful at long last for the sanction of this improvement? As the Question says, this is a lane. It has now become a bus route. Developments are taking place in the area. There is great danger, particularly to small children. When I raised this matter in 1961 —[HON. MEMBERS: "Question."] This is Mansfield. When I raised this matter—
    Mr. Speaker: The point is getting it into Question form.
    Mr. Taylor: When I raised this question in 1961, the cost was £30,000. It is now £40,500. If it is left any longer, it will be still more. Can the hon. and gallant Gentleman advance the date?
    Vice-Admiral Hughes Hallett: No. I do not foresee any appreciable increase in the cost. When the hon. Gentleman

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    studies the details of the scheme, I think that he will agree that the scheme now proposed is ambitious and will be satisfactory. I am sorry that funds cannot be made available in the current financial year, but they are required for even more urgent schemes.

  TRANSPORT

    A and B Licence Holders (Prosecutions)
    Mr. W. T. Rodgersasked the Minister of Transport how many prosecutions were instituted in 1961, 1962 and 1963, respectively, against A and B licence holders for using their vehicles in a manner other than that permitted under the licensing regulations.
    Vice-Admiral Hughes Hallett: As the Answer involves a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Rodgers: Is the Parliamentary Secretary aware that, whatever the figures may show in terms of a relatively large number of prosecutions, there is still very wide public concern at the extent to which the regulations are being broken, whether by excessive hours being worked, excessive loads being carried, or proper maintenance and repairs not being done? This represents not only unfair competition with British Road Services and hauliers who work within the regulations, but a grave risk in terms of safety. Will the Minister make known to licensing authorities that so long as these regulations continue they should be properly enforced?
    Vice-Admiral Hughes Hallett: I am aware of the concern which is felt. I am sure that the licensing authorities are also aware of it, and I assure the hon. Member that every effort is made to enforce the regulations. There is a Question on this subject later on the Order Paper.
    Mr. Mellish: Is not the real trouble that the Ministry has not enough inspectors to do the job? No one denies that there is wide abuse and that it is very dangerous from the point of view of road safety. What is the Ministry doing
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    to ensure that there shall be more inspectors to do this job adequately?
    Vice-Admiral Hughes Hallett: As I have indicated, there is a later Question on this point.
    Following is the Answer:
    The licensing authorities reported the following numbers of prosecutions for breach of conditions of carriers' A or B licences:

    Year to 30th September

    A

    Contract A

    B

    1961

    18

    724

    1,528

    1962

    Nil

    577

    1,401

    1963

    14

    314

    992

    Rural Bus Services
    Mr. Ridleyasked the Minister of Transport if he will take steps to improve rural bus services following the publication of the rural transport surveys he has had carried out.
    Mr. Marples: I would refer my hon. Friend to the reply I gave on 11th March to my hon. Friend the Member for Hexham (Mr. Speir).
    Mr. Ridley: Is my right hon. Friend aware that many rural bus proprietors are literally hanging on in extremely unfavourable financial circumstances waiting for him to do something? While we welcome his surveys and experiments in different parts of the country, is he aware that what is needed is action, and will he give a pledge that as soon as possible he will bring in a scheme, in case the whole system of rural transport collapses?
    Mr. Marples: That is precisely what we are doing in six selected areas. Man remedies have been suggested. The surveys made last year gave us the facts of the problem but not the remedy, and no convincing case has been made out for any particular remedy which might be applied generally. For that reason we decided that we must have practical experience on the ground before assessing the situation, and we are doing that.
    Mr. Strauss: In view of the fact that the Jack Committee reported fully on this matter three years ago, is not the

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    right hon. Gentleman being unusually slow in coming to a decision on the important matter of rural bus services?
    Mr. Marples: The difficulty here is to find the right answer, and even the members of the Jack Committee were not unanimous

    British Waterways Board (Water Sales)
    Mr. Grant-Ferrisasked the Minister of Transport what was the revenue of the British Waterways Board from sales of water in 1963.
    Mr. Marples: Six hundred and nine thousand and fifty-seven pounds. As the Board points out in its Interim Report on "The Future of the Waterways", there are also a number of cases in which water is taken free or at unduly low rates.
    Mr. Grant-Ferris: Can my right hon. Friend say whether several hundred millions of gallons of water are taken annually from the Chesterfield Canal by the Staveley Iron and Chemical Company? Is it not about time that some of these people paid something for the water they get?
    Mr. Marples: I quite agree that this company takes a great amount of water, but it is primarily a matter for the Board within its management responsibility. I understand that for some time it has been trying to negotiate a reasonable and proper arrangement with this company, but it has not yet been successful. The Board is trying to get a reasonable sum, but the company is standing on its rights which date back to 1771.
    Mr. C. Johnson: Has the Board a statutory power to deal with this unfortunate situation disclosed by the replies which the Minister has given to this Question?
    Mr. Marples: No, and that is one of the problems in this case. The Board at present has no statutory power to levy a charge on this water, but, as my noble Friend Lord Hastings said in another place, where there were out of date or burdensome obligations to provide water free or cheaply, it seemed fair that Parliament should consider whether in the context of future waterways legislation
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    they ought to continue. In the interim Report the Board foresees the need for general legislation. This question of proper payment for water supply might well be a matter to be dealt with in that legislation.

    Lorry Drivers (Driving Hours)
    Mr. Wingfield Digbyasked the Minister of Transport how many enforcement officers there are for enforcing Section 73 of the Road Traffic Act 1960, limiting the number of hours during which lorry drivers may drive; and what plans he has for augmenting the number of officers to ensure better enforcement.
    Vice-Admiral Hughes Hallett: The number of officers engaged on this enforcement work varies from time to time since some are also employed on driving test duties. Generally about 140 are so engaged at any one time. There are no plans for augmenting the number at present.
    Mr. Digby: Is it not a fact that there is a good deal of evasion? Surely this is not in the interest of anyone, and least of all other road users?
    Vice-Admiral Hughes Hallett: Our information is that, on the whole, the law is being very actively enforced. I would remind my hon. Friend that last year there were over 12,000 convictions.
    Mrs. Slater: Is the hon. and gallant Gentleman aware that there is this widespread evasion and that these people who work long hours become a menace not only to themselves but to other road users? When he is making inquiries into this misuse of the licences, will he take into consideration the fact that people take out B licences and use them for A licence work, so evading taxation and the responsibility which they ought to face up to, and that this is unfair competition with other users?
    Vice-Admiral Hughes Hallett: The enforcement authorities are well aware of this abuse, and I would remind the hon. Lady that the Geddes Committee is at present investigating this very point.
    Mr. Mellish: Is it not quite ridiculous that there are only 140 officers to do this work? The hon. and gallant Gentleman says that there have been 12,000 people

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    caught and prosecuted. That is only those caught. I wonder what the figure was of those who got away. Will he have another look at this matter? How does he justify having only 140 men to do a national job of this kind?
    Vice-Admiral Hughes Hallett: I shall certainly take note of the hon. Gentleman's views, but I would point out that since 1958 the number of enforcement officers has been raised proportionately to the increase in the number of vehicles. This, no doubt, is another matter which will be looked into by the Geddes Committee.
    Mr. Carmichael: Is the hon. and Gallant Gentleman aware that a great deal of evasion is facilitated by the use of dual log books, and is he considering issuing official log books with numbered pages for each vehicle? This would be of great value to a number of drivers who are forced into this dishonest practice of using two log books.
    Vice-Admiral Hughes Hallett: I have nothing to add on the subject of log books to the reply which my right hon. Friend gave quite recently on the same subject in the House. This is a matter which will no doubt be looked into by the Committee and they will no doubt make recommendations.

    Abandoned Motor Vehicles
    Mr. Spriggsasked the Minister of Transport whether he is aware of the number of motor vehicles which have been abandoned on open land and public parking places; and if he is satisfied that the powers contained in Section 43 of the Road Traffic Act, 1960, are adequate to provide for the removal of vehicles and for the recovery of the costs incurred by the police or any other authority when vehicles are removed from any place other than a road.
    Vice-Admiral Hughes Hallett: We are very conscious of the problem of abandoned vehicles, which is being examined jointly by the Department with the Ministry of Housing and Local Government. Section 43 of the 1960 Act does not concern the removal of vehicles from land other than roads. Section 16 of the Road Traffic and Roads Improvement Act, 1960, empowers local authorities to arrange for the removal and disposal
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    of vehicles abandoned in public parking places and to recoup their costs.
    Mr. Awbery: Is the hon. and gallant Gentleman aware that a large number of car owners are at a loss to know how to dispose of their cars when they have finished with them? Will he make it an obligation on local authorities to provide a depot for such cars and also make it an obligation on the owners to take their cars to the depots when they are disposing of them?
    Vice-Admiral Hughes Hallett: Both measures would require legislation. Under existing legislation, local authorities have power, after making due efforts to trace the owner, to remove a vehicle and recover costs. The matter is being jointly borne in mind by my right hon. Friend and my right hon. Friend the Minister of Housing and Local Government to sec how the procedure for disposing of surplus cars can be speeded up.
    Mr. Lipton: Is the hon. and gallant Gentleman aware that much time and money is wasted by the instructions given to the police to trace the owners of abandoned vehicles, as a result of which the vehicles stay on the streets for months? Will he amend the Regulations so that the local authority can, without lengthy inquiries on the part of the police, take this rubbish off the roads?
    Vice-Admiral Hughes Hallett: We have to bear in mind the law as well as the regulations. The present practice is to leave to the discretion of local authorities and the police how long they take to trace the owners of vehicles. However, I understand that my right hon. Friend the Minister of Housing and Local Government intends to issue a circular on the subject.

    Vehicle Design
    Mr. Rankinasked the Minister of Transport he is aware that small cars are often advertised to achieve, with safety, maximum road speeds at which they cannot in an emergency by suddenly braked without danger to other road users and if he will direct the attention of manufacturers to this fact so as to secure a safer vehicle design.
    Mr. Marples: From my close consultations with the manufacturers I have no doubt that they attach great importance to safety in designing their products. I should regret any general tendency to advertise dangerous maximum speeds.
    Mr. Rankin: Can the right hon. Gentleman tell us what progress is being made in the development of anti-skid control systems, because when a car is suddenly braked in an emergency there is a liability to skid with a consequent loss of stopping power and directional stability? If we appeal to drivers to be safe in their driving, ought they not to have the knowledge that the cars which they are using are safe to drive?
    Mr. Marples: At present certain cars are fitted with devices to reduce the risk of skidding when the brakes are applied. We are considering improved devices which are being tested, but I do not consider that the compulsory fitment of such devices is appropriate at this stage of their development.

    Diesel Exhaust Fumes
    Mr. Pounderasked the Minister of Transport what research his Department is undertaking regarding the possibility of altering the construction and angle of the exhaust pipes of diesel lorries in view of the skid hazards caused by exhaust fumes settling on road surfaces; and what proposals he has to make.
    Vice-Admiral Hughes Hallett: Studies made by the Road Research Laboratory do not suggest that deposits from diesel exhaust fumes constitute a skid hazard of any importance on modern road surfaces.
    Mr. Pounder: While thanking my hon. Friend for that reply— [HON. MEMBERS: "Why?"]—may I ask him if he is aware of the findings of the United States Transport Department, whose researches have resulted in a substantial alteration in the construction and positioning of diesel exhausts on vehicles? Will he not reconsider his Answer in the light of the American experience, which has been successful?
    Vice-Admiral Hughes Hallett: The Road Research Laboratory has considered this matter. We do not consider,
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    in the light of its views, that special research to deal with this problem— which is not considered to be a significant one—would be justified at present.
    Sir J. Langford-Holt: Can my hon. Friend say whether the inquiries made by the Road Research Laboratory show that these fumes represent a health hazard? Would any advantage be achieved by having exhaust pipes, especially of public vehicles and heavy lorries, discharging from higher up?
    Vice-Admiral Hughes Hallett: No, Sir. This would not be advantageous at ail. Most of the constituents of the exhaust are heavier than air. Together with soot and gas and particles of carbon they would fall on passers-by and bicyclists and enter the rooms of houses by the roadside—which would be worse than the present arrangement, whereby at least exhaust pipes expel fumes at ground level.

  RAILWAYS

    London Underground Escalators
    Mr. David Jamesasked the Minister of Transport how many London Underground escalators descend on the right hand side and the left hand side, respectively.
    Mr. Marples: I am told by the London Transport Board that this depends on the flow of traffic and that all escalators are reversible. Normally, 41 descend on the right hand side and 31 on the left. In addition, there are 22 which are inside banks of three or more escalators and three which are on their own.
    Mr. James: As traffic in this country keeps to the left, would it not be to the general convenience if all escalators came down and went up on the left, thereby preventing a rugger scrum at Underground stations?
    Mr. Marples: At peak hours there seems to be a rugger scrum whatever we do. I shall draw the attention of the Board to what my hon. Friend has said, but primarily it is a matter for management.
    Mr. Lipton: Would there not be an improvement if the London Transport Board could arrange that the bits of

    997
    wood on the steps of escalators were wider apart as at present they damage the heels of ladies' shoes?
    Mr. Marples: I do not know as much about ladies' heels as does the hon. Member, but I shall draw the attention of the Board to that point; but ladies' heels do a lot of damage in other respects.

    Stranraer-Dumfries-Ayr Railways
    Mr. Brewisasked the Minister of Transport if he has received the report of the Transport Users' Consultative Council on the Stranraer to Dumfries and the Stranraer to Ayr railways; and whether he will make a statement.
    Mr. Marples: I received the reports shortly before Easter. I am now studying them and all other relevant factors in consultation with my right hon. Friend the Secretary of State and my other colleagues. I shall also take into account the views of the Northern Ireland Government on the effect on through travel to Larne. I cannot yet say when I shall be in a position to make a statement.
    Mr. Brewis: While thanking my right hon. Friend for that reply, may I ask whether he is aware of the consternation caused in south-west Scotland and Northern Ireland by these proposals in the Beeching Report, and will he give very careful consideration to representations that he receives on grounds other than hardship from national organisations such as the Scottish Council and similar organisations in Northern Ireland? Also, will he give us a quick reply, because this is interfering with business?
    Mr. Marples: Yes, Sir; I can give my hon. Friend that assurance. I can also give him the assurance that I shall not reach a decision until all the evidence has been considered, and considered carefully. I would rather reach the right decision than a rapid decision which was the wrong one, and I will reach the right decision as quickly as I possibly can.
    Mr. Emrys Hughes: Will the right hon. Gentleman also keep in mind the seaport town of Girvan, which is greatly interested in his decision in view of the importance to Girvan of having regular
    998
    communications so that it may receive summer visitors?
    Mr. Marples: Yes, Sir.

    North-East Scotland
    Mr. Hector Hughesasked the Minister of Transport if he is aware that the Transport Users' Consultative Committee for Scotland held a public hearing in the County Hall, Aberdeen, on 13th November, 1963, in connection with proposed railway closures in North-East Scotland, heard objections and reported to him; if he will now make public the report that Committee made to him; and what action he proposes to take on it.
    Mr. Marples: I received at the end of December the Committee's reports on hardship for the four passenger closure proposals considered at its meetings on 13th and 14th November. Such reports are made to me in confidence. I have already announced my consent to the closure of the Fraserburgh-St. Combs service on condition that certain additional bus services are provided, and that closure doe, not take place until 1st May, 1965, in order to allow certain road works to be completed. I have also consented to closure of the Elgin-Lossiemouth service.
    I am still considering the other two proposals in consultation with my right hon. Friend the Secretary of State.
    Mr. Hughes: Does not the Minister realise that the proposed closures affect the City of Aberdeen, the County of Aberdeen and a large section of the country, to the extent of wrecking trade, industry, commerce and employment in an area which is struggling against the drift to the South? Does not he realise that to keep secret the Report and the evidence upon which it is based is a disgraceful outrage to the people in that area?
    Mr. Marples: The Report from the T.U.C.C. would be on hardship only. If the hon. and learned Gentleman has any further points additional to hardship, those, too, will be considered, if he will write to me. At the moment, there is a considerable amount of evidence which we are looking into and sifting carefully. The thoroughness with which we go into it is shown by the time we take to consider it.
    Sir J. Duncan: Will my right hon. Friend publish a summary of the T.U.C.C.'s Report?
    Mr. Marples: Each T.U.C.C. decides its own procedure. Most Committees issue a summary to the Press when they send me the completed report.
    Sir J. Duncan: Did it in this case?
    Mr. Marples: I could not answer that question without notice.
    Sir John MacLeod: Will my right hon. Friend ensure that they get a speedy reply to the ones on which he has not reported, and will he ensure that when he replies they are given adequate time before review is made of closures if his answer is that they should be reprieved?
    Mr. Marples: I think we must go into these cases thoroughly with my right hon. Friend the Secretary of State for Scotland, and I can promise my hon. Friend that I will do that.

    Rail Closures
    Mr. Rossasked the Minister of Transport what arrangements he has made for taking advice on the economic and social effects of railway closure proposals in Scotland submitted to him.
    Mr. Marples: As well as considering evidence submitted to me direct by local authorities and other organisations, I consult my right hon. Friends the Secretaries of State for Scotland and for Industry, Trade and Regional Development. The former has at his disposal the assistance of the inter-departmental Scottish Development Group, as well as advice from the Highland Transport Board and the Highland Panel and views conveyed to him by the Scottish Council and other interested bodies.
    Mr. Ross: Is the right hon. Gentleman aware that in some of the areas affected by the closures, many of which have been mentioned at Question Time today, special studies are being conducted into the relationship between future planning and transport needs? Can he assure us that he will await the findings of these special inquiries before reaching any decision? Will he also give a pledge that the evidence and advice he is given, particularly by Government Departments, which may per-
    1000
    suade him one way or the other on these closures will be published, or at least a summary of these matters?
    Mr. Marples: The question of reports made by T.U.C.C.s, which are concerned solely with hardship, is entirely up to the T.U.C.C.s. They must decide what they issue to the Press at the time. In reply to the hon. Member's other point, the Secretary of State for Scotland will have the assistance of the Scottish Development Group, and if that Group's studies are not far enough advanced in certain cases I will certainly wait for them. However, in other cases I give consent for the closures but arrange for the track to be kept open for the present and without prejudice to the future. I arranged for that to be done in the cases of Kilmarnock to Ardrossan and Berwick to St. Boswells.
    Mr. Ross: Surely in Kilmarnock and elsewhere we find areas in which we are to have new towns. Is this one in particular not a growth area, and is it not rather ridiculous, apart from the T.U.C.C.'s considerations of personal hardship, that the right hon. Gentleman should get advice from the Secretary of State that this particular closure should go ahead?
    Mr. Marples: If the new town is developed in such a way that it needs railway services or facilities, then those facilities can be restarted. [HON. MEMBERS: "Oh."] Yes, and that is why we put the conditions in about keeping the track there.
    Mr. W. Hamiltonasked the Minister of Transport what arrangements he has made to have railway closures in Scotland deferred until the economic and social consequences of such closures have been investigated; and which areas are covered by such arrangements.
    Mr. Lawsonasked the Minister of Transport what are the circumstances, in taking decisions on railway closures in Scotland, in which more time is needed for a decision, and closures accordingly are to be deferred.
    Mr. Marples: No special arrangements are needed. Opposed passenger closures cannot take place without my consent. I will not decide any case until I have all the evidence I need. I

    1001
    cannot say in advance on which proposals I may need to make further enquiries, what points these enquiries will cover, or how long they will take.
    Mr. Hamilton: Does the Minister recall that some weeks ago the Secretary of State for Scotland, in a speech to Conservative women in Scotland, said that it would be a year, sometimes two or more, before some of these railways would be closed because they were not going to be closed until the regional development plans were formed? Does the right hon. Gentleman agree with that view?
    Mr. Marples: I cannot remember the speech of my right hon. Friend in such detail as the hon. Gentleman puts forward, but I can assure him that in these cases one cannot say how long it will take because each case is different. Each case has different characteristics and must be considered on its own merits.
    Mr. Lawson: Is not a large part of the difficulty in dealing with this very complicated problem not just that of personal hardship but that of how the closures will affect a whole area? Is he aware that some inquiries appear to be conducted in private, perhaps almost in secrecy, and does he realise that the purpose of these inquiries would be served very much better if the maximum publicity were given to the consultations as they take place and subsequent to the findings being published?
    Mr. Marples: There is no question of secrecy here. Some of the proposals that are made to my Ministry about the expansion of new towns, industry and so on are made by such bodies as the Scottish Development Group, the Highland Transport Board and so on. They work as a team, certainly not in secrecy, and send their reports to the Ministry.
    Sir John MacLeod: Is it not unrealistic to announce closures of these lines while these inquiries are going on? My right hon. Friend must know how long some of these inquiries will take.
    Mr. Marples: As I have said, each case is different. In certain cases it is clear that lines are not being used and are not likely to be used. In other cases it is possible that they are likely to be used and, for that reason, we state that the track should be kept. There
    1002
    are so many permutations and combinations involved in this. It is not merely a question of whether a line should be kept open or whether it should be closed. There are many shades of grey and this is not always a question of black and white.
    Mr. Strauss: Does the right hon. Gentleman think that closures on a wider scale and at a more rapid pace would have taken place had this not been General Election year?
    Mr. Marples: I do not think so.
    Mr. Goughasked the Minister of Transport if he is satisfied with the manner in which public inquiries dealing with the proposed closure of passenger train services are carried out; and if he will introduce legislation to ensure that, at transport users' consultative committee hearings on proposed rail closures, adequate time is allowed for the hearing of objections, and that no hearing is closed until every objector has had an opportunity of putting his case on hardship.
    Mr. Marples: I do not think that any change in the law is required. The purpose of a public hearing is to assist the Transport Users Consultative Committees' assessment of hardship by enabling objectors to amplify the written objections with additional and relevant information I have no evidence that this object is not being achieved under the present procedure.
    Mr. Gough: Would my right hon. Friend not agree that the recent proceedings at Steyning fell very far short of what he is saying? Does he not agree that a public poster appeared all over the countryside saying that the hearing would be for two days, whereas it took only one day? Is he further aware that there is grave dissatisfaction in the whole area that the grievances have not been properly aired?
    Mr. Marples: Notices appeared saying that the herring would be for two days, but they appeared locally without the Committee's authority. They were put out by unauthorised persons and, naturally, the Committee cannot be blamed for that. A great deal of evidence was put to the Committee in writing. It heard lengthy submissions

    1003
    on behalf of local authorities and 30 individuals also spoke at the meeting. I see no evidence that objectors who had new points to make were not heard.
    Mr. Manuel: Does the Minister not recognise that Dr. Beeching's proposals for rail closures and passenger train withdrawals were put forward many months before the plans for central development in Scotland were decided upon? Does this not mean that there should be a reassessment of these proposals, which were made when the Scottish economy was completely stagnant and when there were no indications of plans for central Scotland?
    Mr. Marples: That is exactly what I have said is happening now. When any of these bodies tell me that there will be an expansion of trade or when my right hon. Friend the Secretary of State for Industry and Trade says that a certain area will be developed, all these things are taken into account.
    Mr. Gough: May I bring my right hon. Friend back from Scotland to Sussex? Has he seen this copy of the poster which I have in my hand and which I will hand to him? Will he please look into the matter again and realise that the only way that there can be satisfaction and fair play is for him to call another meeting at Steyning to hear all the objectors, hundreds of whom, including myself, have not been heard?
    Mr. Marples: I will certainly be interested to see a copy of the poster or advertisement in the local paper but, as I said, it was put there by some unauthorised persons for mischievous purposes.
    Mr. Gough: In view of the very unsatisfactory nature of my right hon. Friend's reply I beg to give notice that I shall raise this matter on the Adjournment at the earliest possible opportunity.

  SHIPPING

    Nuclear Propulsion
    Mr. Wallasked the Minister of Transport if he will now make a statement about the laying down of a British nuclear-propelled surface ship.
    Mr. Marples: The Working Group on Marine Reactor Research has just finished its report which the Government have started to consider.
    Mr. Wall: Is my right hon. Friend aware that there is a growing body of opinion that we can make no further progress until a prototype is launched, and that even if we take action now, several countries, including Germany and Japan, are likely to have nuclear propelled surface ships afloat before us? When will he announce a decision?
    Mr. Marples: I cannot say when it will be, but it will be as soon as possible. It is a complicated and complex subject. Again, we want to make the right answer rather than a very quick one which may be wrong.
    Mr. Pentland: Is the right hon. Gentleman aware that on 11th February last year the previous Prime Minister, the right hon. Member for Bromley (Mr. H. Macmillan), informed the House that we should soon have an economic nuclear reactor for a British merchant ship? Can he tell the House why it was that his right hon. Friend was so sadly misinformed and, indeed, on that occasion deceived the House and the country?
    Mr. Marples: I have not seen the actual quotation from what my right hon. Friend the Member for Bromley (Mr. H. Macmillan) said, but the technical assessment in this matter has proved to be a very difficult task. We were asked by the experts that they should have more time to do their task, and we agreed that they should. If they say they need more time, I think they ought to be given it.
    Mr. P. Williams: Would not my right hon. Friend agree that the time has arrived for the Government to make it clear on what conditions they will co-operate with the shipping industry in the construction, maintenance and operation of a nuclear-propelled surface ship at a moment when it is suitable to proceed with it?
    Mr. Marples: I agree. We shall have to have consultations with both the Shipbuilding Conference and the Chamber of Shipping as to how to co-ordinate their activities with ours. We have

    1005
    already seen the Shipbuilding Conference and the Chamber of Shipping; we saw them when this research was started.
    Mr. Strauss: No doubt while the Padmore Committee has been considering the technical problem of which type of design to adopt, the right hon. Gentleman has been having discussions about finance and so on. Therefore, now that the Padmore Committee has reported to him on the design, can we have an assurance, that decision having been taken, that it will not be long before we get a definite decision about relevant policy?
    Mr. Marples: I agree that one must arrive at a definite conclusion in the matter as soon as possible. But we have only just received the report, and it is a little premature to ask me now at what precise date one could take a decision on it.

    Shipping Restrictions
    Mr. Hector Hughesasked the Minister of Transport what progress he has made during the past 12 months to achieve agreement with other maritime nations on shipping restrictions, flags of convenience, flag discrimination and other practices inimical to world trade; which nations he has approached with this object; and what has been the result.
    Vice-Admiral Hughes Hallett: I have nothing to add to the reply my right hon. Friend gave my hon. Friend the Member for Belfast, East (Mr. McMaster) on 12th February.
    Mr. Hughes: Does the Minister realise that, especially in view of the recent American restrictions, it is an outrage that he has nothing to add? Does he realise that Britain as a seafaring nation is greatly dependent on her imports and exports and that they are prejudiced by the limitations which are at present being placed upon them? Is there not a duty upon the British Government to protect British shipping and British imports and exports?
    Vice-Admiral Hughes Hallett: We are well aware of the importance to this country of her shipping, but I cannot accept the hon. and learned Gentleman's statement that we have accepted any of the limitations, as he describes them,
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    which the Americans have tried to put upon us. However, I cannot pursue that, because it anticipates a number of later Questions. With regard to the hon. and learned Gentleman's first observation, I could not accept the fact that we have done nothing. A great deal has been done. The fact that the eleven principal maritime nations are now working closely together is having a considerable influence in checking the spread of these practices.
    Dame Irene Ward: Will my hon. and gallant Friend make a specific statement as to the representations which have been made by all the interests concerned to the Prime Minister, to my right hon. Friend the Minister of Transport, and presumably to my hon. and gallant Friend? We want to knew what answer has been sent by the interests concerned to those who have made the representations. The matter cannot just be carried on in this way.
    Vice-Admiral Hughes Hallett: I am not quite clear which representations my hon. Friend is referring to. If she is referring to the recent American action, the answer is that we have taken no notice of it.
    Mr. Awbery: Another serious division has now arisen among the maritime nations on the question of fixing freight charges. Has the hon. and gallant Gentleman anything to say about the action of the United States Federal Maritime Commission?
    Vice-Admiral Hughes Hallett: I do not think can answer that question. There are a number of later Questions on this very subject.
    Dame Irene Ward: Are we to get an answer?
    Mr. J. Howard: Will my hon. and gallant Friend seek the co-operation of the world Press in drawing the attention of the whole world to the disadvantages of the practice of flag discrimination, particularly that of the United States, building subsidies and operational subsidies, which completely distort the whole flow and economics of the world shipping trade? Surely it is time that tie United States Government in particular were told that their territorial waters do not extend to Southampton waters?
    Vice-Admiral Hughes Hallett: I can assure my hon. Friend that the American Government and other Governments that practise regulation or discrimination are well aware of our views. I will certainly bear in mind what he says about the Press, but on the whole I should have said that the action taken by the Government has enjoyed a very good Press, both in his country and in other countries.
    Mr. Hughes: On a point of order. I shall raise this matter on the Adjournment, in view of the unsatisfactory nature of the reply.
    Mr. Speaker: The hon. and learned Gentleman will try to.

  WESTMINSTER HALL (SIR THOMAS MORE PLAQUE)
  The following Question stood upon the Order Paper:
  Mr. HUGH DELARGY: To ask the Lord Privy Seal, if he will move to appoint a select committee to consider the desirability of setting up a plaque in Westminster Hall in memory of Sir Thomas More.
  Mr. Speaker: The Lord Privy Seal, to answer Question wrongly numbered. Question No. 81.
  The Lord Privy Seal (Mr. Selwyn Lloyd): No, Sir.
  Mr. Delargy: I do not see anything to laugh at—it is a very disappointing Answer. Will the Lord Privy Seal give the reasons for the very disappointing Answer? Does he not agree that the name of More is more intimately associated with the Hall of Westminster than is the name of any other person, since he presided there as Lord Chancellor and stood there as a prisoner to hear his own death sentence, and before that, Mr. Speaker, he was one of your most illustrious predecessors? Why should he not be commemorated when other, lesser people are?
  Mr. Lloyd: I answered "No, Sir" because I am not aware of any widespread desire for this to be done. There have, of course, been a great many trials in Westminster Hall, and I do not think that a multiplicity of plaques is a good thing.
  Mr. C. Pannell: Is the right hon. and learned Gentleman aware that this subject was raised when the late Mr. Stokes was Minister of Works, and that Mr. Stokes refused to proceed further as it would have been thought that as a Catholic he was partisan in the matter? However, is the Leader of the House aware that those of us who are not Catholics and hon. Members throughout this place with any sense of history would like to see Sir Thomas More commemorated? Is this just an overhang of the Establishment against the Catholic faith in the Palace of Westminster because it is a Royal Palace rather than a Royal residence? That was the opinion I was given by Mr. Stokes. Is the Leader of the House, who has shown a certain degree of independence as Leader of the House, entirely sure that his informants have not been too partisan in the matter?
  Mr. Lloyd: I am grateful to the hon. Member for reminding me—I had forgotten it—of the decision Mr. Stokes gave. I will certainly look into the reasons for his decision.

QUESTIONS TO MINISTERS
The following Questions stood upon the Order Paper:
Mr. SHINWELL: To ask the Minister of Transport if he will make a statement on the decision of the United States Maritime Commission which concerns the freight charge contracts between British shipping firms and British shippers.
Mr. WADE: To ask the Minister of Transport whether he will seek to arrange a meeting of representatives from this country and the United States of America concerned with the encouragement of trade between Great Britain and the United States of America to discuss the adverse effects on such trade which may be caused by the demand by the Federal Maritime Commission that dual freight rates negotiated by British shippers should be abolished.
Mr. WADE: To ask the Minister of Transport what representations Her Majesty's Government has made, or proposes to make to the Government of the United States of America on the subject of the adverse effects on British

1009
shipping and British export trade which may be caused by the demand by the Federal Maritime Commission that dual freight rates negotiated by British shippers should be abolished.
Mr. WEBSTER: To ask the Minister of Transport what steps he is taking following the recent demands by the United States Federal Maritime Corn-mission that British shipowners should cancel existing freight contracts.
Mr. Shinwell: Mr. Speaker, the hon. and gallant Gentleman, the Parliamentary Secretary to the Ministry of Transport referred to certain Questions on the Order Paper relating to the recent activities and decisions of the United States Maritime Commission. As this is the first opportunity I have had, and other hon. Members have had, of putting Questions on the Order Paper, and as yet no statement has been made by the Minister of Transport, would you permit the right hon. Gentleman, if he so desires, to answer the Questions?
Mr. Strauss: On that point, Mr. Speaker, I think that you are aware that a number of hon. Members, including myself, sought to put down a Private Notice Question on this very important matter. In those circumstances, and as it very directly affects a large industry, surely it is right for Parliament to have a statement from the Minister in reply to the Questions that are on the Order Paper.
Mr. Speaker: The right hon. Gentleman's questions, he will understand, could not, with respect, rightly be directed to me. It is not for me to pronounce on these matters. Had I been asked to allow a Question to be asked at the end of Oral Questions I must confess that I doubt whether I have powers to have refused it. My powers in the matter are governed by that.
Mr. Shinwell: Further to my submission, it is precisely because there was a failure, so I understand, to have a Private Notice Question accepted that we have had to wait for this opportunity to put the Questions on the Order Paper, but in a matter of such importance, and one which is so urgent as I have submitted to you, if the Minister himself can be persuaded to answer Questions, or
1010
make a statement, would you be willing to allow him to do so?
Mr. Speaker: With respect, I have answered that, and said so. I cannot carry the matter further. I am sorry—it is not for me.
Mr. Strauss: In view of all this, Mr. Speaker, would it be in order to put down a Private Notice Question for the Minister to answer tomorrow?
Mr. Speaker: I will rule on a Private Notice Question when I get it, in the circumstances then existing. I have to preserve that position, for the reasons known to the House.
Dame Irene Ward: Being only a back bencher and not a Privy Councillor, may I have a word in this, Mr. Speaker?
Mr. Speaker: May I hear it?
Dame Irene Ward: Yesterday, I had a Written Question down to the Prime Minister, and asked whether he would answer it after Questions yesterday—
Mr. Ross: That is a waste of time.
Dame Irene Ward: The answer given to me was that the Prime Minister preferred it to be dealt with, quite properly, by the Minister of Transport, but now my right hon. Friend the Minister of Transport is refusing to deal with the matter on the Floor of the House so that we can take part in a discussion.
Mr. Speaker: All that may be perfectly true, but it does not raise a point of order for me; that is the point I must bear in mind.
Sir A. V. Harvey: On a point of order, Mr. Speaker. I put it to you with great respect that we have present the Leader of the House and the Minister of Transport. It has been said that this matter is of real national importance. Surely it is a very small request to ask the Leader of the House, through you, if he will ask his right hon. Friend the Minister of Transport to reply to the Questions.
Mr. Speaker: There is some confusion about this. The duties of the Chair do not extend to causing Ministers to be asked Questions through the Chair. It does not raise a point of order. All the merits may be all right.
Mr. Webster: On a point of order, Mr. Speaker. I myself put down a Private Notice Question to my right hon. Friend on the subject, and I understand —although, of course, I could not quote anybody—that this was pre-empted because of Questions already on the Order Paper today. Is not this a sufficiently urgent matter—not only a shipping matter, but urgent for the whole of this country's exports—for my right hon. Friend to be prevailed upon to ask leave of the House to answer the Questions?
Mr. Speaker: All I am resisting is the proposition that these matters can be dealt with by addressing to the Chair points of order on things which do not raise points of order for the Chair, because they are an abuse. Perhaps I had better emphasise now—and then I can get out of the way and see what happens—that it has not been the practice of the Chair to give any reasons for declining to accept Private Notice Questions, and none was, in fact, given, so it is dangerous to presume what they were.
The Minister of Transport (Mr. Ernest Marples): Mr. Speaker, I have noted the views of the House and would very much wish at the earliest possible moment to make a statement that would really interest the House. I should, therefore, very much like to consider this matter, and then come before the House and ask your permission to make a statement as soon as I possibly can.
Mr. Speaker: Ballot for Notices of Motions for Friday, 17th April.
Dame Irene Ward: On a point of order, Mr. Speaker. As the Minister has made that statement, are we not now allowed to ask him questions?
Mr. Speaker: No. I thought that the hon. Lady's point of order related to the Ballot, otherwise I would not have been able to entertain it.

BALLOT FOR NOTICES OF MOTIONS
  British Exporters (Services)
  Mr. Matthews: I beg to give notice that on Friday, 17th April, I shall call attention to the range of services provided by the Government for British exporters, and move a Resolution.
  Mental Welfare Service (Health and Welfare)
  Mr. Carmichael: I beg to give notice that on Friday, 17th April, I shall call attention to the health and welfare plan in relation to the mental health service, and move a Resolution.
  Tax-free Toll Bridges
  Mr. W. Hamilton: I beg to give notice that on Friday, 17th April, I shall call attention to the need to collect taxes from tax-free toll bridges, and move a Resolution.

  CONTROL OF SURPLUS ARMAMENTS
  3.48 p.m.
  Mr. Richard Marsh: I beg to move.
  That leave be given to bring in a Bill to prohibit trading in armaments surplus to the requirements of the services by private persons or companies.
  The purpose of my proposed Bill is simply to prevent any person or persons from selling surplus military weapons for private profit and to ensure that the sale of such weapons is vested entirely in the hands of Government, as distinct from private companies. My reason for asking leave to present it to the House arises out of a series of issues that I have raised over a period of months. A couple of months ago a number of documents came into my possession suggesting that about 20,000 Lee Enfield rifles had found their way into the hands of the Royalist forces in the Yemen by way of Saudi Arabia.
  Because a British firm of arms dealers had been involved in the matter, I asked the Board of Trade for details of the exports of surplus military weapons to various foreign countries. I then received a very short answer from the Board of Trade, refusing any information whatsoever on the private export of military weapons overseas. [Interruption.] This is almost impossible—
  Mr. Speaker: Order. It is very difficult to hear what weapons were selling. We must be able to hear.
  Mr. Marsh: This is the point that I want to make. We—Parliament—are not selling them. They are being sold by private commercial interests. The point is that when inquiries were made I discovered that all information is refused to Members of Parliament on the export of these weapons.
  I then raised the question with the Prime Minister who, first of all, refused to do anything. I asked him to prohibit the sale for export of such weapons by private companies. This he refused and he asked me to send him any evidence that I might have. I sent the evidence that I have on the matter to the Prime Minister and I should like to quote a small part of it, which is a signed state-
  1014
  ment made by a newspaper reporter who interviewed Major Turp, a director of Intor Limited.
  The reporter said:
  "Turp produced a bottle of Bell's Scotch. He insisted that a People photographer who was with me and myself should join him…in drinks. He poured out extremely liberal measures. He told me: 'There is no object in making any secret of this. There is no doubt that these rifles ended up in the Yemen and I now believe that that was their intended destination all the time.'"
  If Her Majesty's Government are allowing private interests to export large quantities of weapons to prop up vicious and reactionary régimes in the Middle East this is something for which they should stand responsible in the House of Commons.
  I also gave the Prime Minister a signed statement by Mr. Eric Boon, who was well-known some years ago as a boxing champion. He was involved in seeing these weapons loaded on to the aircraft just outside Liège. He asked a Mr. Dawson Ellis, another gentleman involved in this, what it all meant. Mr. Boon said:
  He told me that I was going to Saudi Arabia with the rifles which were then being loaded on the plane. He said that he would give me £2,000 for going on the trip and told me that he wanted me to go because he wanted me to bring back a receipt to indicate that the rifles had reached Saudi Arabia. He said that he was anxious that Saudi a receipt should be obtained by someone travelling with the rifles because almost as soon as they were off-loaded from the plane when it reached Saudi Arabia they would be sent off to the Yemen."
  I gave all this evidence to the Prime Minister. He then said that although he was still unconvinced that any weapons from this country had found their way into the Yemen he would ask the Minister of Defence for the Army to inquire into the matter. The Minister has made inquiries and has written me a letter. I will not go into all the details, but he apparently also feels satisfied.
  In one case I was told that the deal was not carried out by Intor Limited, because the Board of Trade refused a licence for this British company. The transaction was carried out by a Belgian company, Transma, which is another arms company operating in Belgium. I have news for the Minister. This Belgian company is controlled by the

  1015
  directors who control the British company and, therefore, there is here an obvious way out.
  As a result of all this, I began to make further inquiries to find out how large was this private traffic in military weapons overseas from this country. Yesterday, the Minister of Defence for the Army gave figures, for which I had asked him, of the sale of surplus rifles and small arms during the last three years. Virtually all these were exported eventually from this country. The total in the last three years, according to the Minister's figures, was 271,400 rifles. If we have a situation where over a quarter of a million Lee Enfield rifles, which are military weapons, are sold by the Government in this country to private sources who, in turn, sell them overseas, and British Members of Parliament are then refused any details whatsoever about where the rifles have gone, this is a very serious matter.
  Where do these rifles go? Who buys a quarter-of-a-million rifles? I once shot a rabbit with a Lee Enfield rifle and there was very little left of it at the end to eat. Quite obviously, a large number, though not all, of these rifles are bought by people who want them for use in the trouble spots of the world. These are often trouble spots where British troops are risking their lives daily. There is evidence that some of these weapons find their way to these places.
  A B.B.C. correspondent in Cyprus said on 19th February that British Bren guns were being bought by Cypriots for £200 apiece and that bullets for these guns were being sold in Cyprus at 5s. each. Other B.B.C. correspondents have produced evidence that British military weapons found their way into Katanga by way of Rhodesia. Wherever these weapons have found their way into these areas the British Government should take responsibility for their sale. If they decide to sell weapons on this scale they should be prepared to let people know where they are going. Members of Parliament are entitled to knowledge of what is happening.
  The purpose of my Bill is simple. One accepts that from time to time a Government will wish to sell surplus weapons. One also accepts that any Government will sometimes want to help
  1016
  their friends in this world of power politics. All that the Bill seeks to do is to make it illegal for any private company to handle sales such as these and to give the Government a monopoly of such transactions.
  I believe, and I think that all of us would accept, that men do serious and dreadful things in support of ideologies in which they passionately believe and for causes about which they feel strongly, but a man who makes a living from exporting weapons of war purely for private profit is engaged in a squalid and sordid business. This is a widescale activity. This is not a case of just one company.
  The biggest company in the world in this business, Interarmco, an American company in Monte Carlo with permanent London offices, buys most of its small arms from Britain. It does not only buy rifles and Bren guns. It guarantees to be able to sell tanks, flame-throwers, and even jet aircraft. But these transactions are no more despicable and the people concerned no more blameworthy than a Parliament prepared to sit passive and quiet and to allow this to go on without asking questions about what is happening.
  In these circumstances I ask leave to bring in my Bill. It will make the sale of such weapons a monopoly of the Government and which will make this Government, for the limited period during which they will be in office, face the responsibility for some of the shady dealings that they are carrying out.
  3.50 p.m.
  Sir Peter Agnew: I do not consider that this is a Motion on which the House ought to grant leave to introduce a Bill. According to perfectly respectable practice, which is of very long standing, commercial firms in this country meet the proper requirements of foreign Governments with whom Her Majesty's Government are in friendly relations.
  I should join the hon. Member for Greenwich (Mr. Marsh) if the scope of his proposed Bill were restricted to irregular transactions by private individuals for speculative gain in the selling of surplus arms howsoever acquired, but, as he has adumbrated the Bill—none of us has yet seen it in print, and

  1017
  I hope that we shall not—it appears that what the hon. Gentleman proposes would extend to firms such as the great manufacturing firms upon which Her Majesty's Government themselves depend for the supply of arms, and such firms would be refused leave to sell to foreign Governments the arms which those Governments needed either for their own self-defensive requirements or for the requirements of bodies such as N.A.T.O., to which they contributed.
  The hon. Gentleman mentioned, in particular, sales of arms to the Yemen. He suggested that there was something improper in sales of arms taking place to the body to which he referred as supposedly receiving them. That body is the Government of the Yemen, recognised by Her Majesty's Government, namely, the Government of His Majesty the Imam of the Yemen Kingdom. If arms are sold to that Government, this
  in itself would not furnish a proper occasion for the House to consider legislation for the prohibition of sales such as the hon. Gentleman suggests.
  In general, the forbidding of the supply of arms except by sale through a Government monopoly would not in itself make any greater contribution to the preservation of peace than we have already through our adherence to such bodies as the United Nations or N.A.T.O. I believe, therefore, that this is a Bill far the introduction of which we should not give leave, and I oppose the Motion.
  Question put pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
  The House divided: Ayes 174, Noes 205.

  Division No. 59.]

  AYES

  [3.53 p.m.

  Abse, Leo

  Fitch, Alan

  McCann, J.

  Ainsley, William

  Foot, Dingle (Ipswich)

  MacColl, James

  Allaun, Frank (Salford, E.)

  Foot, Michael (Ebbw Vale)

  McInnes, James

  Awbery, Stan (Bristol, Central)

  Forman, J. C.

  Mackie, John (Enfield, East)

  Bacon, Miss Alice

  Fraser, Thomas (Hamilton)

  McLeavy, Frank

  Baxter, William (Stirlingshire, W.)

  Galpern, Sir Myer

  Mallalieu, E. L. (Brigg)

  Beaney, Alan

  George, Lady Megan Lloyd (Crmrthn)

  Manuel, Archie

  Bellenger, Rt. Hon. F. J.

  Ginsburg, David

  Mapp, Charles

  Bence, Cyril

  Gordon Walker, Rt. Hon. P. C.

  Marsh, Richard

  Benn, Anthony Wedgwood

  Grey, Charles

  Mason, Roy

  Benson, Sir George

  Griffiths, David (Rother Valley)

  Mendelson, J. J.

  Blackburn, F.

  Griffiths, Rt. Hon. James (Llanely)

  Milne, Edward

  Blyton, William

  Grimond, Rt. Hon. J.

  Mitchison, G. R.

  Bottomley, Rt. Hon. A. G.

  Hale, Leslie (Oldham, W.)

  Monslow, Walter

  Bowles, Frank

  Hannan, William

  Moody, A. S.

  Boyden, James

  Harper, Joseph

  Moyle, Arthur

  Braddock, Mrs. E. M.

  Hart, Mrs. Judith

  Neal, Harold

  Bradley, Tom

  Hayman, F. H.

  Oliver, G. H.

  Brockway, A. Fenner

  Healey, Denis

  O'Malley, B. K,

  Butler, Herbert (Hackney, C.)

  Henderson, Rt. Hn. Arthur (Rwly Regis)

  Oram, A. E.

  Callaghan, James

  Herbison, Miss Margaret

  Owen, Will

  Carmichael, Neil

  Hill, J. (Midlothian)

  Pannell, Charles (Leeds, W.)

  Castle, Mrs. Barbara

  Holman, Percy

  Parker, John

  Chapman, Donald

  Holt, Arthur

  Paton, John

  Cliffe, Michael

  Howell, Charles A. (Perry Barr)

  Pavitt, Laurence

  Corbet, Mrs. Freda

  Howie, W.

  Pearson, Arthur (Pontypridd)

  Craddock, George (Bradford, S.)

  Hoy, James H.

  Peart, Frederick

  Crosland, Anthony

  Hughes, Cledwyn (Anglesey)

  Pentland, Norman

  Crossman, R. H. S.

  Hughes, Emrys (S. Ayrshire)

  Prentice, R. E.

  Cullen, Mrs. Alice

  Hughes, Hector (Aberdeen, N.)

  Price, J. T. (Westhoughton)

  Dalyell, Tam

  Hunter, A. E.

  Probert, Arthur

  Darling, George

  Hynd, H. (Accrington)

  Randall, Harry

  Davies, S. O. (Merthyr)

  Irvine, A. J.(Edge Hill)

  Rankin, John

  Delargy, Hugh

  Irving, Sydney (Dartford)

  Redhead, E. C.

  Dempsey, James

  Janner, Sir Barnett

  Rees, Merlyn (Leeds, S.)

  Dodds, Norman

  Jay, Rt. Hon. Douglas

  Reid, William

  Doig, Peter

  Jenkins, Roy (Stechford)

  Rhodes, H.

  Donnelly, Desmond

  Johnson, Carol (Lewisham, S.)

  Roberts, Albert (Normanton)

  Driberg, Tom

  Jones, T. W. (Merioneth)

  Robertson, John (Paisley)

  Duffy, A. E. P. (Colne Valley)

  Kelley, Richard

  Robinson, Kenneth (St. Pancras, N.)

  Ede, Rt. Hon. C.

  Kenyon, Clifford

  Rodgers, W. T. (Stockion)

  Edelman, Maurice

  Key, Rt. Hon. C. W.

  Rogers, G. H. R. (Kensington, N.)

  Edwards, Rt. Hon. Ness (Caerphilly)

  Lee, Miss Jennie (Cannock)

  Shinwell, Rt. Hon. E.

  Edwards, Robert (Bilston)

  Lever, L. M. (Ardwick)

  Short, Edward

  Edwards, Walter (Stepney)

  Lewis, Arthur (West Ham, N.)

  Silverman, Julius (Aston)

  Evans, Albert

  Lipton, Marcus

  Slater, Mrs. Harriet (Stoke, N.)

  Fernyhough, E.

  Lubbock, Eric

  Slater, Joseph (Sedgefield)

  Finch, Harold

  McBride, N.

  Small, William

  Smith, Ellis (Stoke, S.)

  Swingler, Stephen

  Wells, William (Walsall, N.)

  Snow, Julian

  Symonds, J. B.

  White, Mrs. Eirene

  Sorensen, R. W.

  Taylor, Bernard (Mansfield)

  Whitlock, William

  Soskice, Rt. Hon. Sir Frank

  Thomas, George (Cardiff, W.)

  Wilkins, W. A.

  Spriggs, Leslie

  Thompson, Dr. Alan (Dunfermline)

  Willey, Frederick

  Stewart, Michael (Fulham)

  Thornton, Ernest

  Woof, Robert

  Sonehouse, John

  Wade, Donald

  Yates, Victor (Ladywood)

  Stones, William

  Wainwright, Edwin

  Zilliacus, K.

  Strauss, Rt. Hn. G. R. (Vauxhall)

  Warbey, William

  Stross, Sir Barnett(Stoke-on-Trent, C.)

  Watkins, Tudor

  TELLERS FOR THE AYES:

  Swain, Thomas

  Weitzman, David

  Mr. Loughlin and

  Mr. Charles Morris.

  NOES

  Allason, James

  Hamilton, Michael (Wellingborough)

  Oakshott, Sir Hendrie

  Arbuthnot, Sir John

  Harris, Reader (Heston)

  Orr-Ewing, Sir Ian (Hendon, North)

  Awdry, Daniel (Chippenham)

  Harrison, Col. Sir Harwood (Eye)

  Page, John (Harrow, West)

  Balniel, Lord

  Harvey, Sir Arthur vere (Macciesf'd)

  Page, Graham (Crosby)

  Barber, Rt. Hon. Anthony

  Harvie Anderson, Miss

  Pannell, Norman (Kirkdale)

  Barlow, Sir John

  Hastings, Stephen

  Peel, John

  Barter, John

  Hay, John

  Percival, Ian

  Batsford, Brian

  Heald, Rt. Hon. Sir Lionel

  Peyton, John

  Beamish, Col. Sir Tufton

  Heath, Rt. Hon. Edward

  Pickthorn, Sir Kenneth

  Bevins, Rt. Hon. Reginald

  Hendry, Forbes

  Pounder, Rabton

  Biffen, John

  Hiley, Joseph

  Price, David (Eastleigh)

  Bishop, Sir Patrick

  Hill, Mrs. Eveline (Wythenshawe)

  Prior, J. M. L.

  Black, Sir Cyril

  Hill, J. E. B. (S. Norfolk)

  Proudfoot, Wilfred

  Bourne-Arton, A.

  Hirst, Geoffrey

  Pym, Francis

  Box, Donald

  Hobson, Rt. Hon. Sir John

  Quenneil, Miss J. M.

  Boyd-Carpenter, Rt. Hon. John

  Hogg, Rt. Hon. Quintin

  Ramsden, Rt. Hon. James

  Boyle, Rt. Hon. Sir Edward

  Holland, Philip

  Rawlinson, Sir Peter

  Braine, Bernard

  Hopkins, Alan

  Redmayne, Rt. Hon. Martin

  Brewis, John

  Hornby, R. P.

  Rees, Hugh (Swansea, W.)

  Bromley-Davenport, Lt.-Col. Sir Walter

  Howard, Hon. G. R. (St. Ives)

  Ridley, Hon. Nicholas

  Brown, Alan (Tottenham)

  Hughes Hallett, Vice-Admiral John

  Rippon, Rt. Hon. Geoffrey

  Bryan, Paul

  Hughes-Young, Michael

  Robson Brown, Sir William

  Buck, Antony

  Hulbert, Sir Norman

  Roots, William

  Bullus, Wing Commander Eric

  Hurd, Sir Anthony

  Ropner, Col. Sir Leonard

  Burden, F. A.

  Hutchison, Michael Clark

  Scott-Hopkins, James

  Butcher, Sir Herbert

  Irvine, Bryant Godman (Rye)

  Seymour, Leslie

  Campbell, Gordon

  James, David

  Sharples, Richard

  Cary, Sir Robert

  Jenkins, Robert (Dulwich)

  Shaw, M.

  Chichester-Clark, R.

  Johnson, Eric (Bliaokley)

  Smith, Dudley (Br'ntf'd & Chiswick)

  Clark, Henry (Antrim, N.)

  Johnson Smith, Geoffrey

  Smyth, Rt. Hon. Brig. Sir John

  Clark, William (Nottingham, S.)

  Jones, Arthur (Northants, S.)

  Soames, Rt. Hon. Christopher

  Cleaver, Leonard

  Joseph, Rt. Hon. Sir Keith

  Spearman, Sir Alexander

  Cooke, Robert

  Kerby, Capt. Henry

  Stainton, Keith

  Cooper, A. E.

  Kerr, Sir Hamilton

  Stodart, J. A.

  Corfield, F. V.

  Kershaw, Anthony

  Stoddart-Scott, Col. Sir Malcolm

  Costain, A. P.

  Kitson, Timothy

  Studholme, Sir Henry

  Coulson, Michael

  Lancaster, Col. C. G.

  Summers, Sir Spencer

  Craddock, Sir Benesford (Spelthorne)

  Legge-Bourke, Sir Harry

  Talbot, John E.

  Critchley, Julian

  Lewis, Kenneth (Rutland)

  Taylor, Sir Charles (Eastbourne)

  Cunningham, Sir Knox

  Lindsay, Sir Martin

  Teeling, Sir William

  Dance, James

  Linstead, Sir Hugh

  Thatcher, Mrs. Margaret

  Digby, Simon Wingfield

  Litchfield, Capt. John

  Thomas, Sir Leslie (Canterbury)

  Donaldson, Cmdr. C. E. M.

  Lloyd, Rt. Hon. Selwyn (Wirral)

  Thompson, Sir Richard (Croydon, S.)

  Doughty, Charles

  Longbottom, Charles

  Thorneycroft, Rt. Hon. Peter

  Drayson, G. B.

  Longden, Gilbert

  Tiley, Arthur (Bradford, W.)

  du Cann, Edward

  Lovers, Walter H.

  Tilney, John (Wavertree)

  Duncan, Sir James

  Lucas, Sir Jocelyn

  Touche, Rt. Hon. Sir Gordon

  Elliot, Capt. Walter (Carshalton)

  Lucas-Tooth, Sir Hugh

  Turner, Colin

  Elliott, R.W.(Newc-tle-upon-Tyne, N.)

  McAdden, Sir Stephen

  Turton, Rt. Hon. R. H.

  Emery, Peter

  MacArthur, Ian

  Tweedsmuir, Lady

  Emmet, Hon. Mrs. Evelyn

  McLaren, Martin

  van Straubenzee, W. R.

  Erroll, Rt. Hon. F. J.

  Maclean, Sir Fitzroy (Bute & N. Ayrs)

  Vickers, Miss Joan

  Farey-Jones, F. W.

  McLean, Neil (Inverness)

  Walker, Peter

  Farr, John

  Macmillan, Maurice (Halifax)

  Ward, Dame Irene

  Finlay, Graeme

  Maginnis, John E.

  Watkinson, Rt. Hon. Harold

  Fraser, Ian (Plymouth, Sutton)

  Maitland, Sir John

  Webster, David

  Freeth, Denzil

  Marples, Rt. Hon. Ernest

  Whitelaw, William

  Galbraith, Hon, T. G. D.

  Marten, Neil

  Williams, Dudley (Exeter)

  Gammans, Lady

  Mathew, Robert (Honiton)

  Williams, Paul (Sunderland, S.)

  Gibson-Watt, David

  Matthews, Gordon (Meriden)

  Wills, Sir Gerald (Bridgwater)

  Gilmour, Ian (Norfolk, Central)

  Maude, Angus (Stratford-on-Avon)

  Wise, A. R.

  Gilmour, Sir John (East Fife)

  Mawby, Ray

  Wolrige-Gordon, Patrick

  Glover, Sir Douglas

  Maxwell-Hyslop, R. J.

  Wood, Rt. Hon. Richard

  Glyn, Dr. Alan (Clapham)

  Montgomery, Fergus

  Woodhouse, C. M.

  Godber, Rt. Hon. J. B.

  More, Jasper (Ludlow)

  Worsley, Marcus

  Goodhart, Philip

  Mott-Radclyffe, Sir Charles

  Goodhew, Victor

  Neave, Airey

  TELLERS FOR THE NOES:

  Gower, Raymond

  Nicholls, Sir Harmar

  Sir Peter Agnew and

  Green, Alan

  Noble, Rt. Hon. Michael

  Sir John Eden.

  Gurden, Harold

  Nugent, Rt. Hon. Sir Richard

  ORDERS OF THE DAY

    RESALE PRICES BILL
    Considered in Committee [Progress, 25th March]
    [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

    RESALE PRICES BILL

      Clause 3.—(EXCEPTION FOR MEASURES AGAINST LOSS LEADERS.)
      4.2 p.m.
      The Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade (Mr. Edward Heath): I beg to move Amendment No. 31, in page 3, line 28, to leave out "six" and insert "twelve".
      This is the first of a number of Amendments to Clause 3, which deals with loss leadering. No doubt we shall have an opportunity to discuss the matter fully when we come to a later Amendment on the Notice Paper. Therefore, I will confine my remarks to this specific point.
      The Amendment extends the period after loss leader selling during which a supplier is entitled to withhold goods from six months to 12 months. I think, therefore, that hon. Members who want to take action about loss leadering will agree that this will be an improvement to the Bill. It takes account of certain types of goods which are sold at only one period of the year for a particular season or purpose. We have come to the conclusion that this would not be covered by the original arrangement in the Bill of a six-months period, but that it would be covered by a 12-months period. I hope that the Committee will accept the Amendment.
      Mr. Charles Loughlin: Would the right hon. Gentleman give one or two examples of the goods to which he refers which are sold once a year?
      Mr. Heath: The obvious ones which have been brought to our notice are all the goods sold at Christmas time or at the New Year, such as calendars, diaries and goods for celebrating the festive season. But it also applies to a number of goods sold at seasonal holiday resorts, and so on.
      Mr. Leslie Hale: The Secretary of State was less happy in his reply to the important intervention of my hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) than even he normally is, because he quoted the example of a diary for 1964 as the sort of thing which could not be sold at a reduction before 1965.
      Mr. Heath indicated dissent.
      Mr. Hale: That is exactly what the right hon. Gentleman said.
      Let us clearly understand what we are discussing. I have told the Committee before that many years ago I appeared as an advocate before the Motor Traders' Association on behalf of a motor trader in my district. The motor trader was alleged to have broken what were then the resale price maintenance conditions imposed by the industry. He had been a reasonably prosperous man. He had invested the whole of his personal fortune in the garage and suddenly, because of a breach of the regulations—and, to be fair, it was a fairly persistent and deliberate breach of the regulations; I do not want to minimise it—he was brought before a tribunal of traders some miles away, who could put him completely out of business, who could prevent his garage from being sold to anyone else, add who could completely ruin him and deprive him of everything that he had.
      My hon. Friends will say that this is an argument for the abolition of resale price maintenance. It is one of the arguments which has impressed me in favour of the Bill. But under this Clause we are going through the reverse process. The Secretary of State said that under Clause 2 one must not withhold goods under certain conditions. Now we are dealing with Clause 3, which says that one can withhold goods under certain conditions. I should have thought that, in view of this contradiction, it was absolutely essential that we should know the circumstances under which the withholding should take place.
      Therefore, the right hon. Gentleman says, "We will deal with this curious thing called loss leaders", which is something that I have not come across. Even now it appears to be a somewhat vague concept, although apparently recognisable when one sees it. The astonishing

      1023
      definition of Christmas goods as something which cannot be sold at a reduction at Easter or Whitsuntide adds to the complexity.
      Clause 2 states that a supplier cannot withhold goods from a trader solely on the ground that he has been cutting prices. I should be out of order if I were to develop the point, but it is essential to postulate the argument in this context. The hon. and gallant Member for Buckingham (Sir F. Markham) dealt with this matter effectively on Second Reading. He said that this Clause was meaningless, ineffective and could not be enforced, because if we tell a man that he cannot withhold goods if he states a ground he will not state a ground. He could still withhold goods on any other ground or by saying, "Your last cheque was a week late." [HON. MEMBERS: "Order."] I am grateful for this attention. This is a serious matter of individual liberty. A supplier cannot withhold goods on the ground that a trader has not sold them at maintained prices, but he can withhold them on the ground that the trader's last cheque was two days late.
      Everyone will say that that is the position today and that it is open to any wholesaler to exercise his own freedom of choice as to the retailers whom he will supply. Clause 3 specifically states that the withholding of goods in certain circumstances is legal. In other words, we are back to the Motor Traders' Association in reverse. If a supplier finds that a wholesaler has been dealing with loss leaders, he can say, "I shall not supply you with goods". The right hon. Gentleman said that that would last for six months.
      A supplier has not to prove—we are not to use words of certitude in this connection—but must have "reasonable cause to believe". If he says that he was told by somebody, that it was reported or that he had read an advertisement purporting to come from the retailer, presumably he would have reasonable cause to believe.
      Do not let us forget that the alliance between wholesalers is not entirely competitive. The retailer who is on a black list may well be on everybody's black list. Let there be no misunderstanding.
      1024
      This is a Clause which specifically declares that the black list is legal. It virtually encourages it.
      The Secretary of State tells us that the Government originally decided upon a period of six months—in other words, that a supplier had to have reasonable cause to believe that the trader had been selling loss leaders, whatever they were, during the last six months. Now, the right hon. Gentleman wants to make it 12 months. How does somebody answer these charges? The wholesaler will be entitled to wait for 11 months and then say, in December, "I was told in January, and had reasonable cause to believe last January, that you were selling diaries, which were subject to resale price maintenance, at a cheaper price because they were out of season".
      The right hon. Gentleman fairly said that many of these points must be developed later, and I do not want to be repetitive or to anticipate the argument. It may be said that there is a clearance or seasonal sale, but there is no definition of a season. It may be once a month, once a quarter or once a year, in which case it becomes an annual sale. The whole thing is full of incertitude. It demands no proof. The whole thing not only leaves the retailer at the mercy of the wholesaler, which, to some extent, he always was, but he is now to be at the mercy of the wholesaler, with Government encouragement.
      Indeed, the wholesaler could say that he is a virtuous wholesaler and has read The Times article, which, strangely enough, appeared on All Fools' Day, and has come to the conclusion that he should exercise a wise and appropriate discretion and give pleasure to the present Government—although it is not likely to be quite the same Government when the application of these provisions commences.
      The right hon. Gentleman has given no argument for the extension to 12 months. He has merely said that some people buy things at Christmas time. One has to go back a long time to check on these things. Is there any argument against the proposition that this extends the period of uncertainty, increases the doubt and makes the position of the retailer almost intolerable? It makes things virtually impossible for the retailer, confronted with a withholding of goods of all kinds, not merely the goods which

      1025
      have been the subject of loss leadership selling, and confronted with ruin on the basis of an accusation that he is reasonably believed to have done something 11 months previously.
      This is an astonishing Amendment. I do not know the views of my right hon. Friends, to whom I always listen with great attention, but my view is that this is an Amendment which cannot be justified. Certainly, it is one which, as yet, nobody has sought to justify.
      Mr. William Clark: I welcome the Amendment, particularly inasmuch as my right hon. Friend the Secretary of State has explained that it will cover loss leaders in seasonal trading. There is, however, a slight inconsistency in the Bill, which I should like to have explained. In Clause 7, when the court gives or refuses an exemption, there is a time limit of two years. If loss leadering is proved, why cannot we have the same withholding of goods for two years rather than for 12 months? As I read my right hon. Friend's Amendment, goods can be withheld for only one year. I should have thought that two years was better. Can my right hon. Friend kindly clarify this?
      4.15 p.m.
      Mr. Geoffrey Hirst: I rose to correct the impression given by my hon. Friend the Member for Nottingham, South (Mr. W. Clark), but I see that my right hon. Friend the Secretary of State is ready to do so. I am happy to leave it to him and, in consequence, will limit my remarks. I thank my right hon. Friend for his Amendment. As far as I am aware, this is the first combined operation that we have had on the Bill and I am delighted that we are both signatories to the same Amendment. It is an important matter.
      The hon. Member for Oldham, West (Mr. Hale) engaged in his game of rounders—in fact, he did his own fielding—but it is obvious that to be fair in this matter, and so that a true judgment may be taken, there must be a sufficiently long period to account for seasonal trading. The idea of Christmas crackers is all fun and games, but it begs the question. It is a question not of selling goods at Christmas, but of covering a person's business long enough in its trading to account for seasonal sales.
      1026
      As my right hon. Friend the Secretary of State will deal with the point raised by my hon. Friend the Member for Nottingham, South, I will leave that alone. I was, however, agitated because my right hon. Friend had the wrong impression. I am grateful to my right hon. Friend for helping us in this small measure.
      Mr. Heath: In reply to my hon. Friend the Member for Nottingham, South (Mr. W. Clark), Clause 7 does not give a limitation of two years on the exemption which may be granted by the Court. It states that fresh application may be made either by the Registrar in the case of an exemption being granted or by the firm concerned in the case of exemption being refused after a period of two years provided that there is, in the view of the Court, a material change of circumstances. It is not, therefore, a two-year limitation on an exemption which is granted. It is not, therefore, comparable to the matter with which we are dealing, and I suggest that on other grounds to extend the period to two years would be too long.
      There was, perhaps, a degree of confusion on the part of the hon. Member for Oldham, West (Mr. Hale) concerning his friend the motor trader, who seems to have been concerned with a process of collective enforcement of resale price maintenance., which was abolished by the 1956 Act, the enforcement by somebody who is granted exemption by the Court under the Bill, because he has completely separate powers of enforcement under Section 25 of the 1956 Act, the person who sells below the recommended price, which is quite permissible under the Bill, and the person who is loss leadering, which is defined either in the Bill or in the Amendment that we will discuss presently. Without going into those details, the important point is that the period of 12 months should be long enough to cover loss leadering in those seasonal goods.
      Mr. Loughlin: I am sorry to pursue the point further with the right hon. Gentleman but the Bill refers to a period of six months and the Amendment specifies 12 months. If the right hon. Gentleman wishes to get the agreement of the Committee to his Amendment, it is reasonable that he should give us at least an indication of the goods to which it will refer.

      1027
      It is not good enough simply to mention seasonal goods, because not having any knowledge of distribution I do not know what the right hon. Gentleman means by seasonal goods. Possibly, many other hon. Members must likewise plead ignorance. Again, somebody spoke of crackers. I was not sure whether he was referring to Christmas crackers or to fireworks. The right hon. Gentleman, however, referred merely to seasonal goods, to diaries, Christmas cards and other Christmas stationery. That is not a runner, either. The right hon. Gentleman has a responsibility, if he desires to get an extension of time, to tell us why. It is not good enough simply to say, "Seasonal goods". Will he tell us one or two of the goods to which he wants to make this provision apply?
      Mr. Heath: I am sorry that the hon. Member does not understand what seasonal goods are. Whatever period there is will apply to all goods, whatever their nature, other than those which are exempt. If the period is six months, goods are withheld for six months. In the case of goods supplied only once a year for a particular purpose once a year, if the period in which they can be withheld is only six months, that does not have any effect on the retailer. It is to make this a deterrent to loss leadering and to have an effect on the retailer that we have extended the period to 12 months, so that it has an effect the next time. This is the reason why I have suggested that the period should be extended to 12 months.
      Calendars are an example of goods supplied mainly once a year. This is not a question of a reduction in price, for that is permitted below the recommended price. We are considering loss leadering and we shall discuss the definition of that later. One could take the example of buckets and spades at the seaside, or anything required for a particular festive season. It will be realised that there is a wide range and that it is right that these things should be covered.
      Mr. George Darling: About 30 names are attached to the Amendment, although only six appear on the Notice Paper. My hon. Friends had put down a similar Amend-
      1028
      ment, but it has now been taken over by virtue of the fact that the name of the Secretary of State is now at the top of the list.
      The reason we put down the proposition that in the loss leader Clause the period during which the supplier should have a reasonable case if loss leadering had been going on should be 12 months, instead of six months, is that when we deal with later parts of the Clause there will be grave difficulties about defining clearance sales and so on, and we could do a better job in 12 months than in six.
      We will have to refer to the matter again when we reach later Amendments, and I do not want to have to go over the arguments again. As my hon. Friend the Member for Oldham, West (Mr. Hale) has said, we shall have to go into the wider aspects of this and other matters later, but, for the time being at any rate, it is our view that for the purposes of definition and so on it is much better to have a period of 12 instead of six months.
      Mr. Roy Jenkins: I follow the logical structure of the right hon. Gentleman's argument, but could he give examples of seasonal goods ever used as loss leaders?
      Mr. Heath: I shall explain to the House later why it is very difficult to instance goods which have been used as loss leaders. The experience of other countries shows that very few have ever been used as such. We are in agreement about that. We have taken this action in deference to those who felt that this was a danger in the removal of resale price maintenance.
      Amendment agreed to.
      Mr. Heath: I beg to move Amendment No. 178, in page 3, line 29, to leave out "person" and to insert "other dealer".
      This is a drafting Amendment which we have proposed to clarify the meaning. Instead of having the general meaning of "person", we have inserted "other dealer".
      Question, That "person" stand part of the Clause, put and negatived.
      Question proposed, That the proposed words be there inserted.
      Mr. Hale: I beg to move, as an Amendment to the proposed Amendment, after "other" to insert:
      "trader who to the knowledge of the dealet is carrying on a business as a retailer in goods of the class and description involved in such witholding where such other".
      This is just an attempt to improve the Clause, but that does not imply any approval for the Clause as a whole. It is merely that it is the duty of the Committee to try to improve Bills as far as it can, even if the general principle of a Clause is repugnant. The right hon. Gentleman gives a definition of the meaning of the Clause which in my view it cannot possibly carry. While I appreciate the way in which my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) presented his case, the right hon. Gentleman suggested that the meaning of the Clause is that the wholesaler can withhold for a period only of six months, now amended to 12 months; but, once he has withheld what is to compel him to supply again?
      If once goods have been withheld and the retailer is off the books, there is no law in the land which compels the wholesaler ever to supply again. However the Clause is designed, the retailer has no right at the end of 12 months to send in more orders and say, "I demand that you supply me, because I have not broken the Clause in the last 12 months". The wholesaler can say, "I have wiped you off the books; I do not know you; I have other customers". There is no way of enforcing the supply of goods. This is a final and decisive step.
      I am signally happy to say that the right hon. Gentleman has moved an Amendment which is an improvement, but it is not a very great improvement, because the definition of "dealer" is itself so fantastically vague as to include almost anybody who sells anything at any time. The right hon. Gentleman will argue perfectly fairly that in Clause 3 we are referring to a rather limited series of operations, which we had always regarded as limited and which he now tells us do not exist. This makes the argument rather more metaphysical than real, but we have to address ourselves to it because the decisive Amendments have not yet been reached and we have to consider the Amendments in the order in which they appear on the Notice Paper.
      1030
      A dealer is defined as someone who sells by wholesale or retail. I have not quoted the exact words, but that is what it comes to. If one sells by wholesale or retail, one is dealing. It does not matter what one sells—arms to the Yemen, second-hand, by the way, or surplus requirements, or soap; nor does it matter whether one sells at the door, or in the shop, and certainly some forms of auction are dealing within the meaning.
      We are dealing with retailers and I wish that it could be borne in mind that in this Clause we are dealing with the up and coming shopkeeper who is trying to improve his business. I put down an Amendment to the Secretary of State's Amendment in page 3, line 30—at the end to add:
      (c) save as in this section specifically declared nothing herein contained shall be interpreted or construed as reflecting on the character or a dealer solely because he seeks to make a profit or to advertise his own business.
      —which is declaratory of Tory principles on the propriety of making profits, and so on, but. I think, Sir William, that it will not hive the good fortune to catch your eye.
      However, at least it is not a crime to be in business, it is not a crime to carry on a shop and it is not a crime to try to attract customers. Yet what we are here saying is that action can be taken not only against the dealer, but any other dealer, and there does not have to be any proof of connivance, but merely a set of circumstances, and those circumstances may be geographical.
      The House of Commons has a metropolitan mind. That is natural, but we are apt to consider circumstances in the case of urban streets, not in the area of Cumberland, for instance, where it is fairly commonplace for retailers to have a single collection and delivery of goods which are dished out to the retailers.
      When I had the privilege of residence at Eskdale the local bus service did the shopping. In widely spread country areas there is nothing abnormal in one retailer buying on behalf of almost all the retailers in the district, sometimes making a very small charge and sometimes not. It would be monstrous if he were to be held responsible for what they did.

      1031
      4.30 p.m.
      This is not a wrecking Amendment. It is designed to make as clear as possible a provision which, in principle, I do not like. We have heard the right hon. Gentleman's definition of "other person". He will say that it does not matter what one calls a person because this is a fairly limited ambit of trading activities which normally one would contemplate as being partaken in by someone as a retailer or as a wholesaler. I appreciate the difficulty of definition here, but I believe that this is an Amendment which the right hon. Gentleman could well accept. We wish to insert the words:
      "trader who to the knowledge of the dealer is carrying on a business as a retailer in goods of the class and description involved in such withholding where such other",
      In other words, the Bill would not, with our Amendment, subject a man to the possibility of ruin without any proof of connivance, without proof of knowledge and without proof that he had acquired the goods with the deliberate intention of dodging the Clause. No doubt that is also the object of the right hon. Gentleman's Amendment. Nevertheless, the Clause would, as he would have it, impose an unfair responsibility on the original buyer of the goods. In effect, it would mean that he would have to control the people to whom he sold those goods. Yet it would surely be impossible for him to control people whose relations with him may depend purely on geographical circumstances. Our Amendment is designed at least to limit this application and is surely reasonable, fair and a distinct improvement.
      Mr. A. J. Irvine: I support the Amendment moved by my hon. Friend the Member for Oldham, West (Mr. Hale). This is a complicated and difficult Clause and I was a little surprised that the Secretary of State treated his own Amendment as merely one of drafting. I believe that the question is larger than that and that my hon. Friend's Amendment would narrow the mischief of the Clause.
      The Committee must recognise that the Clause as it stands makes lawful a withholding of supplies from a dealer who has not himself engaged in loss leading. It is important that that
      1032
      should be clearly recognised. It is a provision which goes very far. Goods might be lawfully withheld from a dealer if he supplies any goods to another dealer who is engaged in loss leading.
      Mr. Heath indicated assent.
      Mr. Irvine: I am glad to have an indication of agreement from the right hon. Gentleman that that is the effect of the Bill as it stands.
      It is important to recognise how far that goes. It is this which gives rise to the anxieties expressed by my hon. Friend the Member for Oldham, West. My hon. Friend believes it absurd to make it lawful to withhold goods from a dealer merely because he supplies any goods to another dealer who has engaged in the last 12 months in loss leading in the class of goods withheld. My hon. Friend does not think this proposal is right if the first dealer does not even know that the second dealer deals in the class of goods withheld. I agree with him.
      I invite the Committee to agree with us in this respect and I draw its attention to the fact that my hon. Friend's speech was careful and restrained, as is the remedy which he recommends. He does not go the whole distance—as he might reasonably have argued that we should do—of saying that the first dealer in the case I have put forward must know that the second dealer indulged in loss leading in the class of goods withheld, but he does insist that the first dealer should know that the second dealer traded in that class of goods.
      My hon. Friend's Amendment would be an improvement. It would narrow the mischief of the Clause and the Committee should feel grateful to him for moving it.
      Mr. Charles Fletcher-Cooke: I have a great deal of sympathy with the motive behind the Amendment moved by the hon. Member for Oldham, West (Mr. Hale), but it seems to me that its wording does not meet the mischief. In 99 cases out of every 1,000 one dealer will know that the other dealer is dealing with this class of goods if he sells those goods to him. Therefore, the hon. Gentleman's Amendment would be a

      1033
      futile remedy for what I believe to be a genuine mischief.
      Surely, what the hon. Member really wants to achieve is that there should be proof that the first dealer is somehow in a plot with the second dealer. The Bill as drafted does not achieve that object because there is no complicity inserted in it as it stands. Yet the dealer is liable to this penalty without in any way being an accomplice in the mischief. There is something in his view but it is not contained in the Amendment, which, therefore, I cannot support.
      Mr. Hale: The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will understand that I do not think that my Amendment goes as far as I would like, but that it was drafted, as my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) has said, with restraint. It is not a very easy thing to draft an Amendment to deal with this point.
      The hon. and learned Member for Darwen made a rather curious mathematical computation when he referred to 99 dealers out of 1,000. If, under our normal legal arithmetic, we give the benefit of the doubt to one person out of 100, surely it is worth doing for 901.
      Mr. Michael Foot: The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) made a powerful case. He claimed that the remedy suggested by my hon. Friend the Member for Oldham, West (Mr. Hale) would not cure the disease. Obviously, the hon. and learned Member thinks that there is a disease, so in that case he should have put down an Amendment to cure it. However, my hon. Friend's Amendment has given the hon. and learned Gentleman an opportunity to make the speech that he would have made if he had put down the Amendment that he should have put down, but did not put down, in order to remedy the disease that he has discovered. Obviously, we all agree that there is a disease. Nobody has dissented from that proposition.
      My hon. Friend the Member for Oldham, West, in his usual blundering fashion, has put forward an imperfect remedy, and we hope that the Government will put forward their perfect remedy. We are doubtful, however, whether that will be the Secretary of State's attitude, first, because he has not
      1034
      leapt to his feet with his usual alacrity and, secondly, because those of us who could see the smile on his face a few moments ago saw that he was indicating to my hon. Friends, although he was doing his best to conceal it from many of his hon. Friends, that he did not think that there was such a thing as loss leadering at all.
      Although the right hon. Gentleman had been puzzling himself to discover whether there was such a thing all these weeks, he had not discovered whether there was such a disease to be cured, but, if his hon. Friends wanted a few sops thrown at them, he would be glad to throw them Nevertheless, he had found it impossible to discover what loss leadering was. We shall have to wait for his speech on the subsequent Amendment to discover whether that was an accurate account of his views, but I do not think that he would dissent from them.
      In the right hon. Gentleman's original Bill, which we have seen rather badly mauled for one reason or another, he indicated that he did not think that there was such a thing as loss leadering to any great extent, and I am willing to bet that in the Bill which existed in the Board of Trade pigeon-holes and which the right hon. Gentleman, so unfortunately for his party, withdrew from the pigeon-holes, there was no mention of a Clause about loss leadering, because it was difficult to discover what it was.
      However, it has now been agreed by the Government that there is such a thing as loss leadering and that some remedy has to be provided against this danger. It is agreed so far by the Committee that we must deal with the position put forward by my hon. Friend and that we must protect the original retailer from being at the mercy of what may occur because of something done by some other dealer to whom he sells the goods. If the words put forward by my hon. Friend are not satisfactory to deal with the problem, surely the Government are prepared to say that they will table an Amendment which will incorporate the sense of what my hon. Friend said which has been supported from both sides of the Committee.
      Mr. R. J. Maxwell-Hyslop: I do not think that this is nearly as

      1035
      complicated as it has been made to appear. The object of a manufacturer in cutting off supply is to prevent the continuation of loss leadership. If a wholesaler sells to a retailer and that retailer, without the knowledge of the wholesaler, indulges in loss leadership, all that the manufacturer will achieve by cutting off supply is cut off the part of his market represented by that wholesaler.
      There would be no incentive for the manufacturer to cut off supply from the wholesaler who was in ignorance of the fact that one of the retailers to whom he sold was indulging in loss leadership. The debate about the terrible fate of the wholesaler who unwittingly sold to a retailer who without his knowledge subsequently indulged in loss leadership is somewhat chimerical and unreal, and we can accept Amendment No. 178 without any further alteration and with a clear conscience.
      4.45 p.m.
      Mr. Heath: I have studied the Amendment of the hon. Member for Oldham, West (Mr. Hale) with some care. There was some difficulty in understanding his purpose in the wording, but what has emerged in the debate is that there are two points with which we are dealing as a result of his Amendment. I spoke on loss leadering on Second Reading when—I repeat it for the benefit of the hon. Member for Ebbw Vale (Mr. M. Foot)—I said:
      "Clause 3 deals with loss-leadering, and the supplier's right to take action against that practice. Every country that has attempted to deal with loss-leadering has found immense difficulty in doing so, but most countries have found, in practice, that it has not been a significant problem."—[OFFICIAL REPORT, 10th March, 1964; Vol. 691, c. 270.]
      This is no new discovery. It has been well known for a long time by those who studied the matter. It was not a question of taking a Bill out of the cubby-hole of the Board of Trade. When I looked at the documentation of the Board of Trade I found the White Paper published by the hon. Member's own Government in 1951, which said that resale price maintenance ought to be abolished in toto—and that was a Government which he was supporting.
      The point raised by the hon. Member and by his hon. and learned Friend the
      1036
      Member for Liverpool, Edge Hill (Mr. A. J. Irvine) is already covered in the Bill, because it contains the phrase
      "has reasonable cause to believe that within the previous six months"
      —amended to 12 months—
      "the dealer or any person to whom the dealer supplies goods has been selling…"
      If he is selling goods, he is aware of the fact that the other dealer is dealing in these goods. I am prepared to listen to examples as to where exceptions might arise, but from the point of view of knowledge and information the point is already covered in the Bill.
      My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) raises the question whether there is a situation in which the supplier will be justified in withholding goods from a dealer who does not know of another dealer who is loss leadering. The position here is that this is meant to be a deterrent to potential loss leadering, and, if the manufacturer in this case is to be able to enforce against the wholesaler, he has to have the power in this form. If he can do it only when he can show that the wholesaler has knowledge that the retailer is loss leadering, it will be extremely difficult for the manufacturer to enforce against loss leadering at all.
      This is a question of balance, and I agree with my hon. Friend the Member for Tiverton that, in practice, manufacturers, wholesalers and retailers will not find it difficult to operate this provision because a manufacturer who finds a wholesaler supplying a large number of dealers, one of whom is loss leadering, will be anxious not to lose these outlets or to lose the services of that wholesaler, and he will naturally get in touch with the wholesaler and point out that this retailer is loss leadering and suggest to him that he should not supply that retailer. That is in the interests of the wholesaler, too, because he does not want to lose supply and to lose the remainder of the outlets.
      This is the way in which it is likely to work, and I think that the subsection is satisfactory in trying to get a balance in deterring loss leadering by particular retailers.
      Mr. A. J. Irvine: Before the Comittee comes to a conclusion, may I say that I take the right hon. Gentleman's

      1037
      point that he thinks that the danger which we have ventilated is met by the words in the Clause,
      "any person to whom the dealer supplies goods"
      He argues that if the dealer is supplying the goods he must know that the recipient trades in these goods. I follow that point.
      But what he may not know, and what the Bill makes no provision for his knowing, is whether the second dealer to whom he is supplying the goods is in the practice of reselling the goods. There is, therefore, a lacuna which the Amendment of my hon. Friend the Member for Oldham, West (Mr. Hale) would stop up. I recommend my hon. Friend's Amendment to the Committee.
      I think that the proposition which I have put forward in meeting the right hon. Gentleman's argument is not far fetched, for the reason that at this point we have moved well away from the wholesaler's level. We are dealing with relations between dealers and dealers, and it may be a transaction fairly far down the chain. It may well be that if, at the end of the chain, one dealer supplies goods of a particular class to another dealer, he may not know that the ultimate dealer recipient of the goods himself resells them. He may not know that to be the fact. It may, in some cases, be the fact. In others it may not, and at best it may often occur that the dealer will not know. I do not think that the right hon. Gentleman's argument on this point by any means meets the case which my hon. Friend the Member for Oldham, West, put forward.
      Mr. F. A. Burden: With respect to the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine), I think that this matter is not nearly so complicated as it has been made to appear. The facts of trade are simple. The pattern of modern trade, particularly in the goods to which r.p.m. applies, is fairly obvious, and if one is engaged in trade one realises what the pattern is.
      The pattern today has, in many instances, moved away from manufacturer to wholesaler to retailer, but in certain instances it still remains manufacturer and wholesaler, and sometimes manufacturer and retailer together. But
      1038
      almost invariably the link is well known. If a wholesaler supplies goods to a retailer who is loss leadering, he will very soon be made aware of that fact and will take action. Indeed, if he does not hear about it, almost inevitably it will be brought to the attention of the manufacturer and he will almost invariably know the wholesaler who was dealing with that particular retailer. The chain of knowledge is not nearly so obscure as some hon. Members would appear to believe. The dangers are practically non-existent, and I believe that the point is adequately covered by my right hon. Friend's Amendment.
      Mr. Douglas Jay: I have no doubt that the circumstances might be such as the hon. Member for Gillingham (Mr. Burden) has just described, but I should not have thought that we could say that there would be no cases in which the circumstances were not more complicated.
      Do we understand that the Minister has given an assurance that he will look at the main point raised by my hon. Friend the Member for Oldham West (Mr. Hale) to see whether he can allow for this in a subsequent Amendment? What we are really anxious to secure is that a retailer does not have his supplies withdrawn because some other dealer, without his knowledge, is indulging in loss leader practice. That would be unjustifiable. If the right hon. Gentleman agrees to look at this again to ensure tilt t that does not happen I think that we shall be satisfied, but unless we get that, assurance I shall be disposed to advise my hon. Friends to press the Amendment.
      Mr. Heath: I shall have to disappoint the right hon. Member for Battersea, North (Mr. Jay), because he has been dealing with the second of the two points raised in this debate. As I understood, the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) accepted my second point, and appreciated that one has to get a balance, but that this was the way in which the manufacturer would have the opportunity of deterring wholesalers from supplying dealers who were loss leadering.
      The right hon. Gentleman then returned to the first point, which was the point raised by the hon. Member for

      1039
      Oldham, West (Mr. Hale), and this, I think, is, in effect, dealt with in the Bill. I think that the hon. and learned Member for Edge Hill was saying that there may be another stage in the chain of dealing, but the right hon. Gentleman was emphasising knowledge of the other chain, and what other people were doing.
      This is a separate point from the question whether there may be others in the chain who are dealing. If there should be such an occasion, the Amendment to the proposed Amendment would not deal with it, because it refers only to the "other dealer", in other words, the supplier, the wholesaler, and the retailer.
      Mr. Hale: I raise this point in view of the speech of the hon. Member for Gillingham (Mr. Burden), who has just left the benches opposite. Nobody seems to have it in mind that there are an immense number of institutions—the reputable Lyons Corner House is one example—in which people carry on two businesses. There is a vast retail shop in front, and cafes behind. In every rural village one finds a garage and a shop. They are under the same management and are carried on on the same premises.
      It is true that the village shop may not indulge in loss leadership, but it is not true to say that people who run establishments which contain cafés, places for the supply of all kinds of food, and cooked foods, frozen products, and so on, and have large shop fronts in which the owners carry on retail trades, may not be put in difficulty unless there is a clear definition.
      Mr. Heath: I agree that there ought to be a clear definition, but I suggest that the Bill gives that, because it deals with the supplier and any other dealer. As the supplier is supplying that dealer, he will know that the dealer is receiving those goods and is dealing in them. The wording suggested by the hon. Gentleman is, therefore, unnecessary, because that provision is already there. The supplier has knowledge of the fact that the man is dealing in these things.
      That is the point with which the Amendment is concerned, that he has knowledge and is dealing in those goods. I think that the right hon. Gentleman
      1040
      accepted that, but he went on to say that the retailer himself might then be dealing with somebody else, and he asked whether that would be covered. In my view it would be, but this is separate from the other point, which is whether the supplier has knowledge that the retailer is loss leadering.
      That is a separate point, and my reply to that is that under the Bill it would not be necessary for there to be what my hon. Friend described as complicity between the wholesaler and the retailer. The wholesaler may not be aware that the retailer is loss leadering, but the way in which the manufacturer in this case can take action is by saying to the wholesaler, "I shall withhold your supplies because the retailer is loss leadering". I believe that that is necessary to enable the manufacturer effectively to act in those circumstances, but again, in practice, there is no doubt that, because of the interests of the suppliers concerned, they would draw the wholesaler's attention to it, and it would then be up to the wholesaler to take action.
      If a wholesaler refuses to take action, at least he knows that the retailer is doing it, the manufacturer knows, and the whole chain is covered. I believe, therefore, that what is set out in the Bill is clear and is effective.
      Major Sir Frank Markham: This will give the green light to the black marketeer. I am talking not of the black market, but of the surreptitious loss leadering which is being carried on in so many ways. If a wholesaler is not aware of what a retailer is doing to another retailer, this will give the green light to black marketeering.
      Mr. Eric Lubbock: The right hon. Gentleman says that this machinery is necessary so that the manufacturer can take action against a wholesaler, even though he finds that that wholesaler has no knowledge of the fact that the retailer is selling these goods as loss leaders. If that is the purpose, would it not have been better if, instead of using this penalty on the wholesaler in the first stages, the Government were to draft this in such a way that a manufacturer had to serve notice on the wholesaler and thereby ensure that the wholesaler was aware that the retailer was indulging in this practice before

      1041
      going to the rather drastic extent of withholding supplies from the wholesaler who may not have knowledge of what is going on?
      Mr. Heath: I think that that would entail a complicated piece of machinery and complicated drafting to ensure that notices, and so on, were issued in these cases. I agree with my hon. Friend the Member for Gillingham (Mr. Burden) that the machinery of normal distribution will cover this in any case, because it is in the interests of everybody to do so, and that it will work naturally. I cannot agree with my hon. and gallant Friend the Member for Buckingham (Sir F. Markham) that this will lead to black marketeering.
      Exactly the reverse is the case. It is the one thing which will enable a manufacturer to influence wholesalers and retailers so that there is no loss leadering. My hon. and gallant Friend has said that it has been going on all over the place, in many instances. That is not the case with resale price maintenance, because power of enforcement exists under the 1956 Act. Many people believe that anyone who sells something cheaper than they do is loss leadering, but that is not so. Loss leadering has a specific definition, which we shall come to later. We must distinguish between selling something more cheaply than other people and loss leadering, which is selling something at a deliberate loss for the purpose of doing in somebody else's product or somebody else's market. That is a different matter.
      5.0 p.m.
      Mr. A. J. Irvine: I would have thought that the argument which we have had on the Clause justifies the des-
      cription of complexity which I applied to it at an earlier stage. It is unfortunate that the matter is obscure to such a degree. I do not want to be thought to have given away anything more than I had contended to concede in what I said earlier. I am satisfied that at the end of the chain of transactions of supply from one dealer to another there may be a case where a dealer supplies goods to another dealer without knowing that that dealer carries on the business of reselling that class of goods and without knowing, additionally—partly, perhaps, as a result of his ignorance under the first head—that he has been in the practice of indulging in loss leadering.
      I cannot put it more clearly than that. There appears to be a loophole here, and the Amendment to the proposed Amendment, although not going the whole way in remedying the fault, goes at least some distance towards doing so. Therefore, it should be welcome to the Committee.
      Mr. Heath: I undertake to satisfy myself that the Bill as it is worded continues right through the chain of command. What I cannot accept is that knowledge of loss leadering is essential before a supplier can withhold supplies. But, on the first point, with which the hon. Member has said his Amendment to the proposed Amendment deals, I undertake to reconsider the drafting to make sure that it carries right through the chain, should there be another retailer after the first retailer.
      Question put, That those words be there inserted in the proposed Amendment:—
      The Committee divided: Ayes 195, Noes 258.

      Division No. 60.]

      AYES

      [5.4 p.m.

      Ainsley, William

      Bowden, Rt. Hn. H. W. (Leics, S. W.)

      Croseman, R. H. S.

      Allaun, Frank (Salford, E.)

      Bowles, Frank

      Cullen, Mrs. Alice

      Awbery, Stan (Bristol, Central)

      Boyden, James

      Dalyell, Tam

      Bacon, Miss Alice

      Braddock, Mrs. E. M.

      Darling, George

      Barnett, Guy

      Bradley, Tom

      Davies, G. Elfed (Rhondda, E.)

      Baxter, William (Stirlingshire, W.)

      Brockway, A. Fenner

      Davies, Ifor (Gower)

      Beaney, Alan

      Broughton, Dr. A. D. D.

      Davies, S. O. (Merthyr)

      Bellenger, Rt. Hon. F. J.

      Butler, Herbert (Hackney, C.)

      Delargy, Hugh

      Bence, Cyril

      Callaghan, James

      Dempsey, James

      Benn, Anthony Wedgwood

      Carmichael, Neil

      Diamond, John

      Bennett, J. (Glasgow, Bridgeton)

      Castle, Mrs. Barbara

      Dodds, Norman

      Benson, Sir George

      Chapman, Donald

      Doig, Peter

      Blackburn, F.

      Cliffe, Michael

      Donnelly, Desmond

      Blyton, William

      Corbet, Mrs. Freda

      Driberg, Tom

      Boardman, H.

      Craddock, George (Bradford, S.)

      Duffy, A. E. P. (Colne Valley)

      Bottomley, Rt. Hon. A. G.

      Crosland, Anthony

      Ede, Rt. Hon. C.

      Edelman, Maurice

      Kelley, Richard

      Reid, William

      Edwards, Rt. Hon. Ness (Caerphilly)

      Kenyon, Clifford

      Rhodes, H.

      Edwards, Robert (Bilston)

      Key, Rt. Hon. C. W.

      Roberts, Albert (Normanton)

      Edwards, Walter (Stepney)

      Lee, Frederick (Newton)

      Robertson, John (Paisley)

      Evans, Albert

      Lee, Miss Jennie (Cannock)

      Robinson, Kenneth (St. Pancras, N.)

      Fernyhough, E.

      Lever, L. M. (Ardwick)

      Rodgers, W. T. (Stockton)

      Finch, Harold

      Lewis, Arthur (West Ham, N.)

      Rogers, G. H. R. (Kensington, N.)

      Fitch, Alan

      Lipton, Marcus

      Ross, William

      Foot, Dingle (Ipswich)

      Loughlin, Charles

      Royle, Charles (Salford, West)

      Foot, Michael (Ebbw Vale)

      Mabon, Dr. J. Dickson

      Shinwell, Rt. Hon. E.

      Forman, J. C.

      McBride, N.

      Short, Edward

      Fraser, Thomas (Hamilton)

      McCann, John

      Silverman, Julius (Aston)

      Galpern, Sir Myer

      MacColl, James

      Silverman, Sydney (Nelson)

      Ginsburg, David

      McInneS, James

      Skeffington, Arthur

      Gordon Walker, Rt. Hon. P. C.

      Mackie, John (Enfield, East)

      Slater, Mrs. Harriet (Stoke, N.)

      Griffiths, David (Rother Valley)

      McLeavy, Frank

      Slater, Joseph (Sedgefield)

      Griffiths, Rt. Hon. James (Llanelly)

      MacPherson, Malcolm (Stirling)

      Small, William

      Griffiths, W. (Exchange)

      Mallalieu, E. L. (Brigg)

      Smith, Ellis (Stoke, S.)

      Gunter, Ray

      Manuel, Archie

      Snow, Julian

      Hale, Leslie (Oldham, W.)

      Mapp, Charles

      Sorensen, R. W.

      Hamilton, William (West Fife)

      Marsh, Richard

      Soskice, Rt. Hon. Sir Frank

      Hannan, William

      Mason, Roy

      Spriggs, Leslie

      Harper, Joseph

      Mendelson, J. J.

      Stewart, Michael (Fulham)

      Hart, Mrs. Judith

      Milne, Edward

      Stonehouse, John

      Hayman, F. H.

      Mitchison, G. R.

      Stones, William

      Healey, Denis

      Monslow, Walter

      Strauss, Rt. Hon. G. R. (Vauxhall)

      Henderson, Rt. Hn. Arthur (Rwly Regis)

      Moody, A. S.

      Stross, Dr. Barnett (Stoke-on-Trent, C.)

      Herbison, Miss Margaret

      Morris, Charles (Openshaw)

      Swain, Thomas

      Hill, J. (Midlothian)

      Moyle, Arthur

      Swingler, Stephen

      Holman, Percy

      Neal, Harold

      Symonds, J. B.

      Houghton, Douglas

      Oliver, G. H.

      Taylor, Bernard (Mansfield)

      Howell, Charles A. (Perry Barr)

      O'Malley, B. K.

      Thomas, George (Cardiff, W.)

      Howell, Denis (Small Heath)

      Oram, A. E.

      Thomas, Iorwerth (Rhondda, W.)

      Howie, W.

      Oswald, Thomas

      Thompson, Dr. Alan (Dunfermline)

      Hoy, James H.

      Owen, Will

      Thornton, Ernest

      Hughes, Cledwyn (Anglesey)

      Paget, R. T.

      Warbey, William

      Hughes, Emrys (S. Ayrshire)

      Pannell, Charles (Leeds, W.)

      Watkins, Tudor

      Hughes, Hector (Aberdeen, N.)

      Parker, John

      Weitzman, David

      Hunter, A. E.

      Paton, John

      Wells, William (Walsall, N.)

      Hynd, H. (Accrington)

      Pavitt, Laurence

      Whitlock, William

      Hynd, John (Attercliffe)

      Pearson, Arthur (Pontypridd)

      Wilkins, W. A.

      Irvine, A. J. (Edge Hill)

      Peart, Frederick

      Willey, Frederick

      Irving, Sydney (Dartford)

      Pentland, Norman

      Wilson, Rt. Hon. Harold (Huyton)

      Janner, Sir Barnett

      Prentice, R. E.

      Winterbottom, R. E.

      Jay, Rt. Hon. Douglas

      Price, J. T. (Westhoughton)

      Woof, Robert

      Jeger, George

      Probert, Arthur

      Yates, Victor (Ladywood)

      Jenkins, Roy (Stechford)

      Randall, Harry

      Zilliacus, K.

      Johnson, Carol (Lewisham, S.)

      Rankin, John

      Jones, Dan (Burnley)

      Redhead, E. C.

      TELLERS FOR THE AYES:

      Jones, T. W. (Merioneth)

      Rees, Merlyn (Leeds, S.)

      Mr. Lawson and Mr. Grey.

      NOES

      Agnew, Sir Peter

      Burden, F. A.

      du Cann, Edward

      Allason, James

      Butcher, Sir Herbert

      Duncan, Sir James

      Amery, Rt. Hon. Julian

      Butler, Rt. Hn. R. A. (Saffron Walden)

      Eden, Sir John

      Arbuthnot, Sir John

      Campbell, Gordon

      Elliot, Capt. Walter (Carshalton)

      Atkins, Humphrey

      Carr, Rt. Hon. Robert (Mitcham)

      Elliott, R. W. (Newc'tle-upon-Tyne, N.)

      Awdry, Daniel (Chippenham)

      Cary, Sir Robert

      Emery, Peter

      Balniel, Lord

      Channon, H. P. G.

      Emmet, Hon. Mrs. Evelyn

      Barber, Rt. Hon. Anthony

      Chataway, Christopher

      Erroll, Rt. Hon. F. J.

      Barlow, Sir John

      Chichester-Clark, R.

      Farey-Jones, F. W.

      Barter, John

      Clark, Henry (Antrim, N.)

      Farr, John

      Beamish, Col. Sir Tufton

      Clark, William (Nottingham, S.)

      Fell, Anthony

      Bevins, Rt. Hon. Reginald

      Cleaver, Leonard

      Finlay, Graeme

      Biffen, John

      Cooke, Robert

      Fisher, Nigel

      Bingham, R. M.

      Cooper, A. E.

      Fletcher-Cooke, Charles

      Birch, Rt. Hon. Nigel

      Cooper-Key, Sir Neill

      Fraser, Rt. Hn. Hugh (Stafford & Stone)

      Bishop, Sir Patrick

      Corfield, F. V.

      Fraser, Ian (Plymouth, Sutton)

      Black, Sir Cyril

      Costain, A. P.

      Freeth, Denzil

      Bourne-Arton, A.

      Coulson, Michael

      Galbraith, Hon. T. G. D.

      Box, Donald

      Courtney, Cdr. Anthony

      Gammans, Lady

      Boyd-Carpenter, Rt. Hon. John

      Craddock, Sir Beresford (Spelthorne)

      Gibson-Watt, David

      Boyle, Rt. Hon. Sir Edward

      Critchley, Julian

      Gilmour, Ian (Norfolk, Central)

      Braine, Bernard

      Cunningham, Sir Knox

      Gilmour, Sir John (East Fife)

      Brewis, John

      Currie, G. B. H.

      Glover, Sir Douglas

      Bromley-Davenport, Lt.-Col. Sir Walter

      Dalkelth, Earl of

      Glyn, Dr. Alan (Clapham)

      Brown, Alan (Tottenham)

      Dance, James

      Godber, Rt. Hon. J. B.

      Browne, Percy (Torrington)

      d'Avigdor-Goldsmid, Sir Henry

      Goodhart, Philip

      Bryan, Paul

      Digby, Simon Wingfield

      Goodhew, Victor

      Buck, Antony

      Donaldson, Cmdr. C. E. M.

      Gough, Frederick

      Bullard, Denys

      Doughty, Charles

      Gower, Raymond

      Bullus, Wing Commander Eric

      Drayson, G. B.

      Grant-Ferris, R.

      1044

      1045

      Green, Alan

      Lucas-Tooth, Sir Hugh

      Ropner, Col. Sir Leonard

      Gresham Cooke, R.

      McAdden, Sir Stephen

      Russell, Ronald

      Grimond, Rt. Hon. J.

      MacArthur, Ian

      Scott-Hopkins, James

      Gurden, Harold

      McLaren, Martin

      Seymour, Leslie

      Hamilton, Michael (Wellingborough)

      Maclean, Sir Fitzroy (Bute & N. Ayrs)

      Sharples, Richard

      Harris, Reader (Heston)

      McLean, Neil (Inverness)

      Shaw, M.

      Harrison, Col. Sir Harwood (Eye)

      McMaster, Stanley R.

      Skeet, T. H. H.

      Harvey, Sir Arthur vere (Macclesf'd)

      Macmillan, Maurice (Halifax)

      Smith, Dudley (Be'ntf'd & Chiswick)

      Harvey, John (Walthamstow, E.)

      Madden, Martin

      Smyth, Rt. Hon. Brig. Sir John

      Harvie Anderson, Miss

      Maginnis, John E.

      Spearman, Sir Alexander

      Hastings, Stephen

      Maitland, Sir John

      Stainton, Keith

      Hay, John

      Markham, Major Sir Frank

      Stanley, Hon. Richard

      Heald, Rt. Hon. Sir Lionel

      Marples, Rt. Hon. Ernest

      Stodart, J. A.

      Heath, Rt. Hon. Edward

      Marshall, Sir Douglas

      Stoddart-Scott, Col. Sir Malcolm

      Hendry, Forbes

      Marten, Neil

      Studholme, Sir Henry

      Hiley, Joseph

      Mathew, Robert (Honiton)

      Summers, Sir Spencer

      Hill, Mrs. Eveline (Wythenshawe)

      Matthews, Gordon (Meriden)

      Talbot, John E.

      Hill, J. E. B. (S. Norfolk)

      Maude, Angus (Stratford-on-Avon)

      Taylor, Sir Charles (Eastbourne)

      Hirst, Geoffrey

      Mawby, Ray

      Taylor, Frank (M'ch'st'r, Moss Side)

      Hobson, Rt. Hon. Sir John

      Maxwell-Hyslop, R. J.

      Teeling, Sir William

      Hocking, Philip N.

      Maydon, Lt.-Cmdr. S. L. C.

      Thatcher, Mrs. Margaret

      Hogg, Rt. Hon. Quintin

      Mills, Stratton

      Thomas, Sir Leslie (Canterbury)

      Holland, Philip

      Moore, Sir Thomas (Ayr)

      Thompson, Sir Richard (Croydon, S.)

      Holt, Arthur

      More, Jasper (Ludlow)

      Thorneycroft, Rt. Hon. Peter

      Hopkins, Alan

      Mott-Radclyffe, Sir Charles

      Thornton-Kemsley, Sir Colin

      Hornby, R. P.

      Neave, Airey

      Thorpe, Jeremy

      Hornsby-Smith, Rt. Hon, Dame P.

      Nicholls, Sir Harmer

      Tiley, Arthur (Bradford, W.)

      Howard, Hon. G. R. (St. Ives)

      Noble, Rt. Hon. Michael

      Tilney, John (Wavertree)

      Hughes Hallett, Vice-Admiral John

      Nugent, Rt. Hon. Sir Richard

      Touche, Rt. Hon. Sir Gordon

      Hughes-Young, Michael

      Oakshott, Sir Hendrie

      Turner, Colin

      Hulbert, Sir Norman

      Orr-Ewing, Sir Charles

      Turton, Rt. Hon. R. H.

      Hurd, Sir Anthony

      Page, Graham (Crosby)

      Tweedsmuir, Lady

      Hutchison, Michael Clark

      Page, John (Harrow, West)

      van Straubenzee, W. R.

      Irvine, Bryant Godman (Rye)

      Pannell, Norman (Kirkdale)

      Vane, W. M. F.

      James, David

      Pearson, Frank (Clithroe)

      Vickers, Miss Joan

      Johnson, Dr. Donald (Carlisle)

      Percival, Ian

      Wade, Donald

      Johnson, Eric (Blackley)

      Peyton, John

      Walker, Peter

      Johnson Smith, Geoffrey

      Pickthorn, Sir Kenneth

      Walker-Smith, Rt. Hon. Sir Derek

      Jones, Arthur (Northants, S.)

      Pike, Miss Mervyn

      Ward, Dame Irene

      Joseph, Rt. Hon. Sir Keith

      Pitman, Sir James

      Watkinson, Rt. Hon. Harold

      Kaberry, Sir Donald

      Pounder, Ralfton

      Webster, David

      Kerr, Sir Hamilton

      Powell, Rt. Hon. J. Enoch

      Wells, John (Maidstone)

      Kershaw, Anthony

      Price, David (Eastleigh)

      Whitelaw, William

      Kitson, Timothy

      Price, H. A. (Lewisham, W.)

      Williams, Dudley (Exeter)

      Lancaster, Col. C. G.

      Prior, J. M. L.

      Williams, Paul (Sunderland, S.)

      Leather, Sir Edwin

      Prior-Palmer, Brig. Sir Otho

      Wills, Sir Gerald (Bridgwater)

      Legge-Bourke, Sir Harry

      Proudfoot, Wilfred

      Wilson, Geoffrey (Truro)

      Lewis, Kenneth (Rutland)

      Pym, Francis

      Wise, A. R.

      Lindsay, Sir Martin

      Quennell, Miss J. M.

      Wolrige-Gordon, Patrick

      Linstead, Sir Hugh

      Ramsden, James

      Wood, Rt. Hon. Richard

      Litchfield, Capt. John

      Rawlinson, Sir Peter

      Woodhouse, C. M.

      Lloyd, Rt. Hon. Selwyn (Wirral)

      Redmayne, Rt. Hon. Martin

      Woodnutt, Mark

      Longbottom, Charles

      Rees, Hugh (Swansea, W.)

      Worsley, Marcus

      Longden, Gilbert

      Ridley, Hon. Nicholas

      Yates, William (The Wrekin)

      Loveys, Walter H.

      Rippon, Rt. Hon. Geoffrey

      Lubbock, Eric

      Robson Brown, Sir William

      TELLERS FOR THE NOES:

      Lucas, Sir Jocelyn

      Roots, William

      Mr. Peel and Mr. Batsford.

      Proposed words there inserted.

      Mr. Heath: I beg to move Amendment No. 179, in page 3, line 30, to leave out from "been" to the end of line 38 and to add:

      The Temporary Chairman (Dr. Horace King): I think that it would be for the convenience of the Committee if, with this Amendment, we discussed new Clause No. 6—Loss Leadering.
      Mr. Heath: This is the substantive Amendment, to which I referred earlier, on the question of loss leadering. I have already mentioned to the Committee, as indeed, I did to the House on Second Reading, the difficulty of dealing with the problem of loss leadering. Clause 3 safeguards the right of a supplier to refuse to supply a dealer who has recently been selling similar goods as loss leaders. We have defined loss leadering as selling at or below the price paid— this is in subsection (2)—
      "including any sums charged in respect of purchase tax or delivery, and after deducting any discount allowed on that purchase."
      That was the attempt which we made in the draft of the Bill to deal with this very difficult subject. There have been a number of representations made to us since the Bill was published, and during the Second Reading debate, and there are a number of Amendments on the Notice Paper putting forward various ways of amending the Bill—and some new ways of handling the matter.
      5.15 p.m.
      What has been criticised, in particular, in the approach which we adopted in Clause 3, is the rigidity of the definition of loss leader selling. It has been represented to us that the loss leader seller is not necessarily, or normally, the man who is selling below cost. The man to whom objection is taken is the man selling at an unprofitable margin with the object of attracting custom for other goods. Again, I think the rigidity of the definition, as we have drafted it at present, could be disadvantageous in the reverse sense of bringing in sales which would not normally be regarded as loss leader sales. Perhaps I may explain that point.
      A dealer who is buying quantities which are too small to qualify for a discount for quantity would technically be selling goods as loss leaders, even when he was selling them at a price which was the normal selling price of a store which could buy more cheaply. This is the difficulty of the rigid conception. If there is a retailer—who does
      1048
      not obtain discount because of the small quantities which he buys—who attempts to sell the goods at the same price as a store or a larger firm which is getting a discount, the smaller man would be loss leadering and the larger man would not. This is the problem which arises from this type of approach and from the rigidity which goes with it.
      Some hon. Members, including some of my hon. Friends, and also the right hon. Member for Battersea, North (Mr. Jay) have tried to deal with this difficulty by adding on an arbitrary mark-up to the price paid on our definition. I suggest that this is not a good course to follow. First, it does not dispose of the rigidity in the situation; if anything, it adds to it. No mark-up is equally applicable to all trades, nor is it applicable to all the dealers in those trades. So, in an approach of this kind, the adding of an arbitrary amount adds to the rigidity and has the other disadvantages which I have described.
      Moreover, in the particular case I mentioned of the small man who does not get a discount, in consequence it makes the disparity between him and the other person getting a larger discount even greater. For these reasons I suggest that there are disadvantages in the approach which we have adopted and in some of the Amendments on the Notice Paper, although we are not at this moment discussing them, and in particular the Amendment recently put forward by the right hon. Member for Battersea, North.
      We have looked again at the problem and I have put down this Amendment. We want to improve the approach and, at the same time, we do not want to use those provisions as a means of putting obstacles in the way of genuine competition, or deprive the consumer of the advantages of lower costs which come from it. I think it possible to amend this Clause in a way which could still result in those advantages being obtained and which would avoid some of the disadvantages of the other approach, and so the provisions which I have included in the Amendment adopt a rather different procedure. What it does, fundamentally, is to redefine the question of loss leader selling. It is defined by reference to the purpose for which the loss leader sale was made.

      1049
      This is a concept which was embodied in the Amendment tabled by my hon. Friend the Member for Crosby (Mr. Graham Page). It was also the approach taken under the Canadian law with Canada's amendment of 1910. The effect of this Amendment would be that loss leader selling would have taken place when goods were resold—not for the purpose of making a profit on the sale of those goods, but for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods, or otherwise for the purpose of advertising the goods of the dealer. There would be two conditions in this new approach, new so far as the Bill is concerned. The object of the sale must be advertising or attracting custom and the seller must not be expecting a profit on the goods.
      As this is an approach which has regard not simply to the price at which the goods are bought and sold, but to the intention with which they are sold, it is unnecessary to make specific mention of sales below cost. It is dealt with by the double approach and avoids the rigidity which is the criticism of the Clause in the Bill as at present worded and in some of the Amendments to the Amendment I have moved. This Amendment allows for two cases in which dealers may sell goods in the manner which in other cases would be regarded as loss leader selling, not in order to make a profit but to advertise and attract custom.
      In the first case, they can do so at genuine seasonal and clearance sales. In the Bill as originally drafted we had, "seasonal and clearance sales" and a number of points were raised as to how this matter could be dealt with. I think that we have covered it as best possible by the introduction of the word "genuine". This exception does not include the case where goods are bought specifically to be sold as loss leaders during a sale. It does, of course, permit goods to be bought cheaply, a particular cheap line from a manufacturer to be sold cheaply in a sale. I am informed that that process goes on even in the best of establishments. That can continue, but the provision does not permit the purchase of goods to be sold for the purpose of loss leadering in a sale.
      1050
      The second exception applies where the manufacturer or supplier has authorised the low cost sale. If the manufacturer likes to give his consent for this to be done under the Amendment I have moved, it is perfectly permissible. A dealer may have a good reason for selling a line apart from a sale and if the manufacturer agrees that would be all right. It would be unjust if the dealer were treated as if he were loss leadering.
      There are Amendments on the Notice Paper put down to subsection (2,b) of my Amendment. This is where the consent of the manufacturer is given. No doubt we shall be discussing those Amendments in more detail later, but I mention now that I recognise that there is a problem about the second part of this provision.
      The Temporary Chairman: Order. It will be made very difficult if the right hon. Gentleman starts even slightly to discuss the Amendments to his Amendment. We shall have an opportunity of discussing them later.
      Mr. Heath: I was about to say that I recognise the problem which we can deal with later.
      I suggest that this approach is an approach which may be more acceptable in dealing with this difficult problem of loss leadering. I have tried to set out clearly the conditions in which it can be defined and to show the exceptions which can be made and also that the assent of a supplier may be obtained. This gives the supplier the right to withhold goods in the case of loss leadering. In the case of the man supplied feeling aggrieved, he is able to bring an action for an injunction or the Board of Trade as the Department concerned would be able to bring an action for an injunction. The man supplied would bring it under Chaise 4(2) and the Board of Trade would bring it under Clause 4(3).
      In that case it would be decided by the Court whether the definition had been carried out, whether it was a genuine seasonal sale and the other things as laid down by the Clause. I hope that this would retain a proper balance between the interests of the supplier who wishes to prevent loss leadering and the interests of the retailer in carrying on his retail trade.
      The Temporary Chairman: I think that it will help hon. Members, and be for the convenience of the Committee, if we discuss now generally the Amendment which has been proposed. There will be an opportunity later, after we have had a general discussion on this Amendment, for the Committee to discuss the Amendment in the name of the hon. Member for Oldham, West (Mr. Hale), in line 2 to leave out "or a similar", and the Amendment which goes with it in the name of the hon. Member for Shipley (Mr. Hirst) to leave out lines 14 to 16. It would help the Committee and avoid getting into confusion if we left the substance of those Amendments to subsequent debate.
      Mr. Hirst: On a point of order, Dr. King. Unless I very much misunderstood the list of selected Amendments supplied for our guidance the Amendment in the name of my hon. Friend the Member for Bournemouth, West (Sir J. Eden), in line 15, to leave out from "or" to the end of line 16 and to add
      "in the case of goods made to the order of a supplier of that supplier".
      is also included, as is the second Amendment in my name, in line 15, to leave out from "or" to the end of line 16 and to add
      "in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier"
      The Temporary Chairman: We shall deal with those Amendments when we come to them. We shall be dealing later with the Amendment which seeks to leave out lines 14 to 16. The fate of the Amendment in the name of the hon. Members for Bournemouth, West (Sir J. Eden) depends on what happens to that Amendment. The second Amendment in the name of the hon. Member for Shipley (Mr. Hirst) will be taken with the first Amendment in his name and with the Amendment in the name of the hon. Member for Bournemouth, West. They will all be taken together and there will be an opportunity to divide the Committee if the hon. Members feel so inclined.
      Mr. Jay: I am one who finds this matter complicated rather than simple as some hon. Member opposite said earlier today. Even the procedure seems somewhat complicated.
      1052
      The practice of loss leadering or, as one hon. Member opposite called it, "loss leadership," today seems, in one respect at any rate, to resemble the Loch Ness Monster. Some people passionately believe it exists, but other people insistently affirm that it does not. In these circumstances, the wise course for an independent and impartial observer is to suspend judgment, but to provide in our practical arrangements for the possibility that it may exist.
      It was for that reason that I said on Second Reading that I think the right hon. Gentleman was right to put into this Bill some Clause allowing for loss leadering if it exists. If it does not exist this Clause will do no harm, it will in effect be null and void. If it does exist, Parliament will have provided for it. Our criticism of the Clause as it originally appeared was that it was a sham and would have been ineffective. If loss leadering had occurred it would not have been caught by the Bill as originally introduced. The right hon. Gentleman originally defined loss leadering in effect as selling by the retailer or the wholesaler below the cost at which he had purchased his goods, and in fact it would have been possible for him to sell at a loss to himself even though he did not sell at nearly so low a price as that. In our opinion, the original Clause did not meet the case, and we think that the Amendment that the right hon. Gentleman has now introduced is certainly an improvement on the hit-and-miss affair with which we started.
      5.30 p.m.
      We—as the right hon. Gentleman was allowed to say, whether in order or not —put down another Amendment which provided for what he calls an arbitrary "mark up" as the definition below which the loss-leadering would be held to occur.
      I think that the hon. Member for Twickenham (Mr. Gresham Cooke) put down an exactly similar Amendment. We are not discussing them at the present time, but our view is that the right hon. Gentleman's Amendment is an improvement on his original Clause. But we are still not satisfied that it is as good as ours. However, in order to keep in order I shall at this moment not

      1053
      extol the virtues of ours so much as express doubts and questions about the Amendment the right hon. Gentleman has introduced. We have three main doubts about this which I express now, and which I hope the Committee will take steps to meet when we come to the following Amendments.
      The first is whether we have now abandoned the objective test. We did not like the right hon. Gentleman's actual objective test, but that does not necessarily mean that some other objective test might not have been satisfactory. We have abandoned that one, and we are now basing the definition of loss-leadering in effect on the motive of the retailer or the dealer who indulges in the practice. He is to be adjudged to have indulged in loss leadering if he has in fact two motives—I ask the Committee to notice this—in order to satisfy the conditions. He has to have not one motive but two. First, he has to be acting not for the purpose of making a profit. That is not enough. He has also to be acting for the purpose of advertisement.
      It is not enough to prove the point that the retailer is not selling for a profit. He has to be both not selling for a profit and selling to attract business under the definition in the right hon. Gentleman's Amendment. I should have thought that there would have been very considerable difficulties in proving in court a motive and proving a double motive. I also draw attention to the fact—here again, if I understood the complicated point that we have now reached correctly—that the onus of proof will be on the manufacturer. Someone will be taking proceedings against the manufacturer for withholding supplies. The manufacturer will be arguing in defence that he was justified in doing this because the retailer was indulging in loss leadering. For the manufacturer to make good his defence, he will have to establish that the retailer was loss leadering and he will have to prove doubly, on two points, what was the retailer's motive. We have some doubt whether this is a practical legal proposition and the best solution which can be found of this problem. That is our first criticism of the Amendment.
      1054
      Our second relates to the words which occur in line 2 of the right hon. Gentleman's Amendment
      "whether obtained from that supplier or not."
      I should like to ask the right hon. Gentleman whether we are not here in danger of going too far. It is extremely difficult to get a right balance in this matter. I understand that these words have the effect that if it is shown that a particular retailer is indulging in loss leadering, not merely may the particular supplier who sold these goods withdraw his supplies, but a manufacturer of similar goods may withdraw his supplies from him also, even if no loss leadering occurred in the case of his goods.
      One may well ask, if these words mean what they appear to us to mean, are we not here in danger in order to provide for loss leadering of reintroducing at least a touch of the collective boycott which we all agreed to get rid of in 1956? It would appear that if manufacturer A finds that retailer B is selling his goods at an unreasonably low price, not merely manufacturer A may withdraw his supplies but all other suppliers of these goods may withdraw theirs. If that is what it means, we ask whether that is going further than the Committee should.
      Mr. Maxwell-Hyslop: Was not the point about the collective boycott that this was applied when the goods were sold by the retailer at infinitestesimally below or somewhat below the fixed retail price? This provision is confined to loss leadering rather than to price cutting where they are still making a profit?
      Mr. Jay: That is perfectly true, and that is why I said that it was not identical with the collective boycott which we outlawed before. It is not the same, but it permits a collective withdrawal of supplies under certain conditions, even by manufacturers whose goods have not been subject to loss leadering.
      Mr. Angus Maude: Did I understand the right hon. Gentleman to say that the word "description" means goods which may be not merely not of the same brand but only of the same general type and manufactured by somebody else? That is quite a new suggestion to me.
      Mr. Jay: I was not at the moment coming on to that point, because I think

      1055
      that it arises on a later Amendment. I should have thought that the words
      "whether obtained from that supplier or not"
      had the effect that I am suggesting. If not, it is for the right hon. Gentleman to tell us.
      The third doubt that we have is this. Do we not perhaps by introducing the Amendment in this Clause run the risk of outlawing certain quite legitimate transactions which we do not really wish to prevent? May we not have a case where a retailer, large or small, quite legitimately decides because certain goods have become very difficult to sell or are nearly unsaleable, to sell these off rapidly at some considerable loss? This might not be done maliciously to damage other retailers or maliciously, if that is the right word, in order to damage the manufacturer. It might be done as a perfectly reasonable business transaction. I recognise that the genuine clearance sale is provided for, but we have some doubts whether all transactions of this kind would come under it.
      I realise also that the right hon. Gentleman is providing for the case where the sale at below the recommended price or not at the agreed price is agreed by the manufacturer. Is he quite sure that there are no cases which we would regard as legitimate but which would be caught as loss leadering under this Clause? I understand that we are discussing the new Clause 6 of the hon. Member for Shipley (Mr. Hirst) in conjunction with this Clause. I would only say a brief word about them. I understand that this Clause goes rather further than the Bill in declaring loss leadering to be unlawful outright. But the Bill and the right hon. Gentleman's Amendment do not do that. They merely say that where loss leadering occurs, supplies may be lawfully withdrawn. They do not say that loss leadering practised by the retailer is in itself unlawful.
      I agree here with the Minister rather than with the hon. Member for Shipley. It is going too far to indicate in the Bill that loss leadering as such shall be an unlawful practice, but no doubt we may discuss this further as the debate proceeds. I mentioned in Parliament that we still have on the Order Paper the Amendments which we put down to
      1056
      supplement what the right hon. Gentleman calls the arbitrary mark-up of 5 per cent. In our view a better solution might be to insert in the Bill both these provisions so that it might be possible to establish loss leadering as occurring under either the one criterion or the other. This would be possible, and we should like to argue at the next stage that it might be the best solution.
      In our view the right hon. Gentleman has done better than he did on Second Reading, but we do not think that his Amendment is by any means perfect. We shall not oppose it, but we hope that it will be further improved by subsequent Amendments, both ours and some by hon. Members opposite.
      Mr. R. Gresham Cooke: My right hon. Friend's Amendment is an improvement on the original subsection (2), which I never liked because it was tied to the price at which the retailer took the goods into the shop. If a retailer sells exactly at that price, he is loss leadering. If he has a large packet of cigarettes in the back of the shop and he has to take it through to the front to unpack it and to display it, them he is incurring certain handling charges in that operation. The rigid price index by which loss leadering was judged was in our view wrong. That is why my hon. Friends and I put down Amendments to add 5 per cent. in respect of the handling charge.
      The right hon. Member for Battersea, North (Mr. Jay) said that there must be telepathy between himself and myself in that we both put down similar Amendments. He must have been sensible enough to pick up my ideas telepathically, because my Amendment is No. 38 and his is No. 41.
      Subsection (2)—I am not speaking of the rest of the Amendment—is an improvement on the original.
      Mr. R. T. Paget: What does the hon. Member understand as the meaning of
      "not for the purpose of making a profit".
      Does that mean gross profit or net profit?
      Mr. Gresham Cooke: That is a matter for debate. I do not think that it would be gross profit. It means not selling at a loss.

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      Many people have taken this question of loss leadering rather too lightly. It has been suggested that if it occurs it is not of very great consequence and that it can be dealt with. But evidence from abroad has shown that it can be extremely damaging to a manufacturer. I have drawn attention to the example of an electric razor in America some years ago, I believe the Schick razor, which was used as a loss leader throughout America. Retailers became so fed up with the loss leadering which went on that the number of dealers handling that razor fell from 35,000 to about 7,000. It can be damaging if certain goods are frequently treated as loss-leaders.
      Subsection (2) is an improvement on the original, but I want to reserve my right to comment on the various Amendments as we reach them.
      5.45 p.m.
      Mr. Peter Doig: It seems to me that far from making this issue clearer the Secretary of State has made it more confused than before. The Bill was proposed in order that the consumer should get goods cheaper than he can get them now, but the Amendment seeks to prevent a person from selling these goods cheaper, which surely is a contradiction.
      Secondly, this provision will be impossible to enforce. The right hon. Gentleman has already given us various interpretations by various people. My hon. and learned Friend the Member for Northampton (Mr. Paget) asked whether it was gross or net profit. Nobody has defined that. It seeks to prevent stores from attracting customers into their stores on the basis that they are selling one article as a loss leader slightly cheaper than elsewhere. In the first place, the customer knows that it is a loss leader only if he is familiar with the prices. If customers are familiar with prices and go in to buy these goods because they are cheaper than anywhere else, they are hardly likely to be taken in by other goods in the store which are being sold at a higher price.
      The only people who will be attracted into the store are those familiar with prices, and if they are familiar with prices there is no danger of their being
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      taken in through buying dearer goods in the store. In other words, the Clause and the Amendment are nonsense. They will bring the law into contempt, which is the worst thing which can be done, because it will be impossible to enforce the law and will encourage the "Smart Alecs" and deter the honest people. This provision does not help the customer.
      Let us see the effect on small shopkeepers. The small shopkeeper pays more for his goods than the larger store because of the quantity in which he buys. He is at a disadvantage because he cannot possibly sell at the same price as others. Not so long ago Nescafé was sold all over the country at 3s. 6d. per 2 oz. tin. One day, out of the blue, one multiple store sold that article at 2s. 3d. I have no doubt that everybody jumped to the conclusion that it was a loss leader, but it is still being sold at 2s. 3d. At one stage it was as low as 2s. Id. The quality has not been reduced, because it is guaranteed pure coffee. [Laughter.] If it is not, then it is a case for the Minister because there is printed on the tin, "Guaranteed only pure coffee". There is also printed on the tin "2 oz." so that there has been no reduction in quality or weight. Yet these tins are still selling at 2s. 3d.
      What is more interesting, the small shopkeeper, who I know for a fact could not buy fills commodity even for 2s. 9d. wholesale, is now selling it at 2s. 9d. or less. The public have benefited all round. The small shopkeepers must have benefited because previously they could not buy it for 2s. 9d., let alone sell it at that price. They must be buying it a t a lower price than before. Without this substantial cut in price—it may well have been a loss leader, for all I know—today the millions who buy these tins of coffee would have been paying at least 1s. 3d. per tin more than they now pay. This is what the Minister wants. Therefore, why does he introduce this Amendment and sacrifice his principles to try to satisfy some people?
      Mr. Wilfred Proudfoot: Perhaps I c an help the hon. Gentleman. There was competition between manufacturers. Maxwell House came fresh from America, if he remembers the T.V. commercials of the time. There was a war on between manufacturers, which

      1059
      enabled this cut to be made at the retail end.
      Mr. Doig: I have been in this trade. The price was cut before Maxwell House came to this country, so what the hon. Gentleman says is nonsense. The Government are mistakenly concerned about small shopkeepers; they think they are helping them. In fact they are doing the exact opposite. If they do this, they will ensure that every small shopkeeper will go out of business.
      Now, cigarettes. The large multiple which buys direct from the manufacturer gets double the discount granted to the small man who buys from a wholesaler. The Minister will no doubt say that he can sell cheaper so as to compete with the large multiple. I do not know how the small man can do that. If the multiple reduces its profit—it does not matter whether it is by 2 per cent. or by 5 per cent.—at the end of the day it will be able to sell cheaper than the small man can ever do. So the small shopkeeper will go out of business on this item. I know from my correspondence that this item is causing more concern than any other. If the Tories are concerned about the small shopkeeper, the last thing they should do is to support either the Clause or the Amendment.
      What effect will this have on the big store? We are told that manufacturers can withhold supplies for one year. A big store has plenty of money. It will stock up for months and months beforehand. It will fill its store. It can then afford to sell cheaper. It will not care tuppence whether stocks are still supplied to it. It already has stocks. It can afford to act in this way. But the small shopkeeper cannot afford to act in this way. Again, he will be at a disadvantage.
      There is nothing in the Bill which says that it is illegal for someone to give free gifs or that his supplies can be stopped if he does so. If the principle works as some people seem to think and if the housewife can be hoodwinked as some people seem to think, instead of selling an article for 9d. less than its proper price a trader can give away a free gift costing him 9d. If the trader has one of these walk-around stores such as multiples have, he can put a free
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      gift right at the end of his store so that a customer has to walk right round the store before he comes to the free gift. The small shopkeeper cannot do this. Even if he tries to compete, he will still be at a disadvantage. In effect, the Government are putting it into the hands of multiples and are condemning small shopkeepers to go out of business.
      Seasonal sales and clearance sales should not be confused. The two things are different. Take Christmas trees. It is difficult to define who would be the manufacturer of a Christmas tree. The Bill says that, if the manufacturer's consent is obtained, it is all right to cut the price. There might be some difficulty about talking to the manufacturer of an Easter egg.
      Why should seasonal sales be exempted? This will encourage the smart alecs and operate against honest traders. I know that there are such things as seasonal trades, because I was connected with the wholesale trade for many years before I came here. Seasonal sales occur with Christmas trees. I know a firm in my town which had a substantial number of Christmas trees left over at 5 o'clock on Christmas Eve. If it had not reduced the price substantially, the trees would have been a dead loss. The firm decided at 5 o'clock to slash the price so as to avoid a dead loss.
      Mr. Graham Page: Are Christmas trees subject to resale price maintenance?
      Mr. Doig: As far as I can see, the Bill covers everything. It does not say that Christmas trees are exempted. At any rate, I can find no such reference. There are many things to which resale price maintenance does not apply now but to which it will apply if the Bill is enacted. This is a serious matter. If the hon. Member for Crosby (Mr. Graham Page) were in a business of this type, where such losses occur from time to time, he would be very concerned about it, because it could hurt his business. There is only one way to cover oneself. If one is not allowed to sell cheaper in a bad season or on a bad day, one must increase the price every year to cover this loss. Therefore, the customer will lose again.
      Mr. Paget: Since Clause 1 has abolished resale price maintenance, are

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      Christmas trees or anything else subject to resale price maintenance when we reach Clause 3?
      Mr. Doig: They are, subject to the conditions which are put into the Bill, which were not there before and did not apply before.
      Take hot cross buns and Easter eggs. I can assure the Committee that for a very large industry this is a serious matter. I worked in the bakery trade. I know the effect of this. Bakers must decide in advance how much they are likely to sell. Being optimists, they think it will be a great day; they think that the weather will be good over Easter. They decide to make a fairly substantial amount. In the event, it pours with rain for the two days of the Easter weekend and nobody wants to go out. Nobody wants to roll his egg. The bakers are left with thousands and thousands of hot cross buns which they cannot sell. [Laughter.] This may sound funny to some hon. Members, but I assure the Committee that bakers do not think it is funny when it happens to them. They slash the price so that they make it cheaper for customers to buy hot cross buns than for them to buy something else which will keep. The customers then buy hot cross buns cheaper. The customers benefit. This is what the Minister wants to happen, but it is what he will prevent. I could give dozens of examples of seasonal sales.
      Presumably clearance sales will be limited by numbers. It is said that someone can have three or four a year. What happens to firms which own two or three different retail shops under different names? Presumably they would be allowed three clearance sales for the shop that goes under the name of Smith, another three for the branches which go under the name of Brown, and another three for the branches which go under the name of Robinson.
      6.0 p.m.
      We then have something which is even harder to define—common directors. When one pursues the evils of the Rent Act one often finds that a firm of solicitors will write saying, "We are writing on behalf of our clients and we are sorry to do this". One often finds on inquiring more deeply that the
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      solicitors are the owners. In this case there will be common directors of different companies and it will be difficult to prevent them from shifting goods from one clearance sale to another if the goods have not been sold. The whole effect of the Clause will be to bring the Jaw into contempt.
      We are old that if the manufacturer consents to certain things being done, that is all right. Are hon. Members not aware that under present trading conditions many manufacturers own their own retail outlets and are, therefore, at a distinct advantage? Are they not also aware that what is known as inter-company discounts are given whereby one company can obtain goods much cheaper than anyone else so that there is nothing to prevent that company's competitors from being put out of business? All this shows that the Clause will do nothing to help the consumer and small shopkeeper. It will react against them, and the best thing we can do is to reject everything concerning the Clause.
      Mr. Maxwell-Hyslop: Before proceeding, we should briefly rehearse what the advantages of avoiding loss leadership are to each, section of the community. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) mentioned one harmful effect of loss leadership—to the manufacturing section of the community—and, normally, if a product is consistently used for the purpose of lass leadership it will not pay any specialist stockist to stock it. He will stop stocking it and then, when the large outlets which use the product as a loss leader cease to use it as such, the manufacturer will find that he does not have any retail outlet for his products. As has been pointed out, this happened with the manufacturer of Schick razors, but that is only one example.
      Another harmful effect which loss leadership can have—
      Mr. Anthony Crosland: Will the hon. Gentleman give an example of an item not subject to r.p.m. in the whole of the grocery trade in this country where, in the last few years, a manufacturer has been damaged in the way he has described?
      Mr. Maxwell-Hyslop: For precisely the reason the hon. Gentleman mentions —because it has not been effectively subject to r.p.m.—the question does not arise. The question arises when one uses a product of one kind largely to sell a product of another kind. That was the point I was arriving at.
      When a door-to-door salesman arrives at a house in answer to an advertisement for what appears to be a bargain object and then attempts, often successfully, to sell the occupant something completely different, after disparaging that which is advertised and which appeared to be such good value, the public recognises that this is socially undesirable as well as a dishonest trading practice. However, for some reason the public are somewhat slower to grasp that it is immaterial from the social and economic point of view whether this is done on the doorstep or in a shop.
      The principle is the same if one uses loss leadership for the purpose of transfer selling, that is, if one gets oneself into houses or customers into one's shop by inciting them to buy something which appears to be a wonderful bargain and having done so persuades them to buy lots of other things they do not want to buy in addition to the thing one has advertised or, alternatively, having got them physically where one wants them, one disparages what one has used to attract them, to sell something more expensive. That is equally undesirable for the consumer.
      We have had examples of where it is harmful to the manufacturer—because he has lost his retail outlet—where it is harmful to the consumer—for the reasons I have just explained—and where it is harmful to the distributive trade because it has probably laid in a stock—and for which, if the job is being done properly. it has included a stock of spare parts to service the product—and finds that, because a retailer who does not normally trade in that line of business, but is using the product as a lure, those who are able to offer proper service with spare parts find that they have invested in something which is being sold for loss leadership purposes and, from the point of view of the regular trader in the product, the article continues to be unsaleable for as long as loss leadership in that product continues.
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      It is fair to remind the Committee that it is not just any one section of the community which is potentially liable to suffer harm from the process of loss leadership. In this connection, it must be remembered that there is a distinction between price-cutting and loss leadership. Price-cutting, technically, is still done with the intention of making a profit on what is being sold, whereas loss leadership is done with the intention of persuading the purchaser to spend more money than he or she intended to do when entering the shop.
      Mr. J. M. L. Prior: The hon. Member for Grimsby (Mr. Crosland) asked my hon. Friend to give an example of where in this country a manufacturer had lost as a result of the process of loss leadership in a retail shop. I think that probably the tea trade is a good example of this. Because of perhaps the better advertising and the size of the company, Typhoo has been able to get a larger share of the market. That company's teas are almost always sold at a cut price in the shops as loss leadership while the teas of some of the smaller firms are sold at the full price. A lot of the smaller manufacturers in the tea trade are being driven out of business for this reason. Here is an example of a manufacturer being adversely affected, even to the extent of being driven out of business.
      Mr. Maxwell-Hyslop: I am grateful to my hon. Friend, because the food distributive trade is not one with which I am familiar, although I have had cases reported to me—I admit that I do not know whether they are true—of sugar being used as a loss leader, as a result of which some small grocers have stopped stocking sugar simply because they cannot sell it.
      This is another example of the purchaser being put to inconvenience. The purchaser can no longer buy this commodity together with the other goods which are normally purchased from the same place. We arrive back at the conclusion that loss leadership has a number of characteristics, of which loss is only one. The primary characteristic is the intention of persuading the intending purchaser to buy something that he or she did not intend to buy in the first place. [HON. MEMBERS: "No."] Of course it is.

      1065
      The object of running a business is to make money. One does not lure someone into one's shop simply to sell something at a loss. It is done in the hope that the customer will buy something else and thus provide one with a profit.
      Mr. A. E. P. Duffy: Can the hon. Gentleman explain to the Committee why a higher price often acts as an inducement to would-be purchasers?
      Mr. Maxwell-Hyslop: I was not speaking about higher prices. I was saying that when one attracts someone into a shop to buy something which is normally priced at, say, £19—perhaps a piece of household electrical equipment—and then one says that the service given by the manufacturer of the £19 article is appalling and that it is believed that at least 14 people have already been electrocuted using it—following that by explaining that one has in stock a better but similar article, but costing 23 guineas, that is an example of a customer being induced into a shop to spend more than he or she intended to spend when coming in in the first place. This is not a method of trading that I find commendable.
      When one returns to what the Clause —
      Sir Douglas Glover: My hon. Friend is making a dreadful attack on reputable traders. Will he cite one case in which this practice goes on?
      Mr. Maxwell-Hyslop: I am not aware that I have made an attack on any reputable trader. The whole point is that what I have been describing is not characteristic of reputable traders, but of disreputable traders—[HON. MEMBERS: "No."] I would describe traders who go in for transfer selling of the kind I have described as disreputable rather than reputable—
      Mr. Denis Howell: Is the hon. Member aware that this morning I bought the tie I am now wearing from a shop which is only half a minute's walk from this building? When I asked for a half-guinea tie, the shopkeeper showed it to me, and then sought to persuade me to buy a better tie, asking, "Would you not like to see ties at 15s. or 1 guinea?" But I bought this one at 10s. 6d. There
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      is nothing disreputable about it—[Laughter.] The only thing wrong with it is that it is the wrong colour.
      The point is that that sort of thing is happening in every shop. The shop people get the customer in and then try to sell him something better than he went in to buy. That is normal trading practice. I never heard such nonsense as what the hon. Gentleman says.
      Mr. Maxwell-Hyslop: The hon. Gentleman's intervention is quite irrelevant. We were discussing the situation in which a loss leader was employed, and the hon. Gentleman has not given us any reason to suppose that the tie he purchased could ever sell itself to anybody for more than 10s. 6d.—
      Mr. Michael Shaw: A letter I have here from a manufacturer in my constituency may illustrate my hon. Friend's point. He writes:
      "When we placed"—
      the particular commodity—
      "on the market we decided to make our first into retail price maintenance and it was a good job we did. The line was so attractive and popular that the slick boys featured it and sold it with scarcely any profit to attract people into their shops. Reasonable traders could not be expected to have the same line on show in the same street at a higher price and had we not stopped price cutting the line would have been killed, for even Woolworth's were sorely concerned. The slick boys would have dropped the line once it had served its purpose, for they are always on the lookout for what are known as sneck lifters'."
      Mr. Maxwell-Hyslop: I am grateful to my hon. Friend for that quotation, which gives the Committee the benefit of another example of that kind.
      I do not subscribe to any magic figure of 5 per cent. What matters to the retailer is not only the actual percentage margin but the physical amount of money he makes. There are some very expensive items on which dealers may take a very much smaller margin. For instance—and I am open to correction here—I believe that in the motor trade if the local garage man is neither a distributor, an agent nor even a sub-agent for a manufacturer's brand, but someone locally orders that brand of car through him, he may get less than 5 per cent. on the deal; he carries no spares for the vehicle, but merely makes the introduction. To put that dealer in the class of those employ-

      1067
      ing loss leaders would be rather ridiculous.
      I therefore could not give my support to the proposition that we should embody in statute law a magic percentage of 5, or any other percentage, because the difference between the types of commodity subject to resale price maintenance is so great that it does not seem reasonable—
      The Temporary Chairman: Order. The hon. Gentleman is now proceeding to an Amendment that we will discuss later.
      6.15 p.m.
      Mr. Maxwell-Hyslop: Then I will return to loss leadership, and end, as I began, by welcoming this Amendment which, I think, as amended by a subsequent Amendment, will go some way to ridding us, where manufacturers wish to be rid of them, of trading practices of this kind. The Amendment does not make loss leadership itself unlawful; it does not prevent it. All it does is to enable manufacturers to use one particular weapon to prevent it should they elect to do so. I think that some hon. Members who have contributed to this debate may not always have had it in their mind that this is all that the Amendment does. It does not prevent loss leadership when the manufacturer does not judge that great harm is resulting from it.
      That is my final point, and it is one that must not be overlooked, because there could conceivably be circumstances in which there might be loss leadership in a type of item, such as something rapidly becoming obsolescent not for reasons of fashion, which could be dealt with by a clearance sale, but for technical or other reasons. It might be desired to get rid of that item in some such way, and as long as the manufacturer concerned did not judge that his retail outlets or his goodwill with the purchasers was damaged, he would not withhold supply and enforce the conditions permitted by the Clause.
      Mr. Roy Jenkins: I found some of the remarks of the hon. Member for Tiverton (Mr. Maxwell-Hyslop) more convincing than others, and the one I found most convincing was when he said that he had no great knowledge of the
      1068
      retail trade. In those circumstances, I am not surprised that he touched but lightly on the interjections offered by his hon. Friends the Members for Lowestoft (Mr. Prior) and for Brighouse and Spenborough (Mr. Shaw), who made, at any rate, some attempt to provide supporting evidence for his argument. But I thought that when he said that he was grateful to his hon. Friend the Member for Lowestoft his gratitude was easily aroused, because his hon. Friend provided a powerful argument in support of the views that my hon. Friend the Member for Grimsby (Mr. Crosland) sought to put forward.
      We were asked for an English example of loss leadering—the well-worn Schick razor case is cited so often that one is apt to think that there is no other example—but the hon. Member for Lowestoft quoted the case of the tea trade. He said that Typhoo tea was used as a loss leader to such an extent that all its competitors were being driven out of business. That seemed to be a very extraordinary piece of evidence in support of the case then being advanced by the hon. Member for Tiverton.
      I must congratulate the Secretary of State on his flexibility and patience this afternoon. We have not seen the "iron-heeled" Secretary of State, or whatever he has been called. He began this afternoon by telling us that in his view the problem of loss leaders was not a serious one at all, and I agree with him. Since then the right hon. Gentleman has introduced a three-hour debate in a substantial speech, has contributed several Amendments to the Notice Paper and has previously had a Clause with two subsections, all designed to deal with this totally unsubstantial problem. Whatever else it indicates, it shows that the right hon. Gentleman is prepared to spend a good deal of the time of the Committee, whether with the assistance of the Chief Whip or not, to put up a front of listening to the nonsense of his hon. Friends.
      Before coming to discuss in detail what the problem of loss leadership is, if there is a problem, and how serious it is, in so far as it exists, I ought to declare an interest. I declared an interest when I spoke on a Private Member's Bill at the beginning of February. I have not spoken on this Bill since and,

      1069
      therefore, I must declare that I have a connection with a retail group. Its interests are rather mixed, because the group has some supermarkets—and supermarkets are normally regarded as the predatory and likely beneficiaries of the Bill—but its main business is in departmental stores which, in America at any rate, have suffered much the worse from competition resulting from the abolition of r.p.m.
      What is the loss leader problem, in so far as it exists? First, as the Government now recognise, it is certainly not selling below the cost of purchase. It indicates an extraordinary lack of awareness of the problem with which they were dealing, from the point of view of Parliamentary draftsmen, the right hon. Gentleman's Department and even the right hon. Gentleman himself, that when the Bill was drafted they thought that the problem of loss leadering was apparently the problem of selling below the cost of purchase. It is not so.
      Where people do this for the purposes which have been outlined they sell below the cost of purchase in a great number of cases, and they do it whenever they have made a mistake in purchasing. Their object is to clear their shelves as quickly as they can. Any sensible retailer who wants to keep clean stock in these circumstances, once he has decided that a mistake has been made, must cut his prices over and over again until he gets rid of the stock. He may sell in these circumstances at a price 50 per cent. below what he has paid. This is not loss leadering. It is somebody paying for an error of purchasing judgment.
      Mr. E. Fernyhough: It is not true to say that a loss leader is never sold below cost. Last year, thousands of tons of sugar were sold in this country, by many retailers, at below the purchase price.
      Mr. Jenkins: As is so often the case with interruptions, and one is guilty of it oneself, if my hon. Friend had waited I would have covered that point. If I said that there was never a case of loss leadership as a result of miss-purchase, it was a mistake. What I intended to say was that the final point of loss leadership was not to sell below the cost
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      of purchase, although sugar is an isolated example where sale below the cost of purchase has taken place on a large scale.
      The crux is selling above cost of purchase so that one makes some gross profit, but not enough, so that there is no question of making any net profit. The net profit is nil or negligible, and the loss leader is sold so that expenses are not covered. But it is not very easy to define exactly when this is taking place, because expenses and adequate levels of gross margin vary enormously from trade to trade and even from retailer to retailer within a particular trade. One must be particularly careful that one is not dealing with a person who is said to be using a loss leader which would only be a loss leader for the less efficient retailer, who thinks that he is being penalised as a result of what is happening.
      Quite apart from variations in margin from trade to trade, there is also the problem that a great number of retailers, without having any desire to indulge in the practice of using loss leaders, allocate their overheads in different ways between different types of goods that they sell. They may have certain reasons for keeping up a high level of trade in a particular department by selling goods at much lower levels than in another department. It is therefore extremely difficult to compare the facts.
      Mr. Burden: The hon. Member has made an interesting point which anyone who has any knowledge of wholesaling and retailing knows is perfectly valid. The retailer's accountants fix the notional mark-up which he should make. He fixes with his departmental heads the notional mark-up which they should make, and if prices are cut in one department the retailer has to average out by increasing prices in others.
      Mr. Jenkins: The hon. Member was kind enough to say that I was making an interesting point. He has now made an interesting point. I am grateful to him for doing so, but it is not exactly the point that I was engaged in making.
      Assuming that loss leadership, with all its difficulties of definition, exists to some extent—although its extent can be greatly exaggerated—what exactly are the dangers and disadvantages of the practice? I

      1071
      should like to look briefly at this problem from the point of view of three possible groups of people involved. First, there are the retailers other than the retailer who is selling the loss leaders. Secondly, there is the consumer. Thirdly, there is the manufacturer of the articles concerned. The Secretary of State, in his speech, rather indicated that it would be improper to use a loss leader to attract custom. That seemed to me a rather broad definition. What is improper and unsound is the use of loss leaders to drive out competitors. This is the point.
      Let us suppose that we have a situation in one town where there are three stores of roughly equal size one of which uses loss leaders against the other two direct competitors. I do not think that the consumer would suffer at all.
      Mr. Keith Stainton: Ultimately.
      Mr. Jenkins: He might even benefit. I pose the situation of three retailers of roughly equal strength occasionally using loss leaders against each other. I see no reason why this should produce a situation in which ultimately the consumer would suffer.
      Mr. Stainton: Ultimately, a local monopoly could well emerge and that is something beyond the reach of national monopoly legislation. If hon. Members would think of towns and villages throughout the country I think that they would find that this is potentially a very worrying point.
      Mr. Jenkins: This is another example where, if an hon. Member had waited, it would have been much less necessary to interrupt. I was simply laying down conditions in which there are three competitors of roughly equal size and I see no reason to assume in those circumstances that this condition would not exist—
      Mr. R. E. Winterbottom: If there are three similar shops in the same locality occasionally using loss leaders, the assumption that the consumer would benefit depends upon an analysis of the quality of the loss leaders. If the nature, substance and quality of the goods are similar in each of the three shops, my hon. Friend is right, but if a secondary line of goods
      1072
      is introduced in the place of a main line of goods then it is quite a different kettle of fish.
      Mr. Jenkins: If the quality of the goods is reduced this might be a point, but in a situation in which there are three or more competitors of roughly equal strength one might have loss leaders used occasionally without any great effect on the pattern of trade.
      The more dangerous situation—this is where the crux of the problem lies—is one in which there are not, say, three people of roughly equal strength but there is one retailer in a dominant position already in a locality who is anxious to mop up the smaller elements of competition which remain. Clearly, the danger of this situation can be accentuated if the dominant retailer has other substantial stores, if the store in the one locality is but a small part of his business, whereas the other people there are operating on their own without the same reserves.
      The situation then, if there is a determined effort to use loss leading to drive the other people out of business—it is here, I think, and almost only here that the danger arises—could be such that the consumer would suffer considerable disadvantage. The number of retail outlets would decline, competition would be eliminated, and this could have great disadvantages from everyone's point of view.
      6.30 p.m.
      Now, the problem of the manufacturer. I should like to see more examples of how the manufacturers would suffer in this connection. The position of the manufacturers, of course, is at the heart of the problem. It is important to remember in all our discussions that the case for resale price maintenance comes, to a very large extent, from manufacturers masquerading in the small shopkeeper's clothes. It is the manufacturers who, to a very large extent, encourage the small shopkeepers to worry about it. I am bound to say that, apart from the hoary old case of the Schick razor, I know of no examples; and, if everyone was using Schick razors as a loss leader throughout the United States, I should have thought that a great number of them must have been sold, whatever else was

      1073
      happening. Apart from that, there have been practically no examples.
      I am not arguing that loss leading cannot sometimes lead to considerable disadvantage. I have outlined the situation in which it could be used not to move against competitors as such but to move against competition itself in such a way that, ultimately, the position would worsen against the consumer and against other retailers.
      Mr. Maxwell-Hyslop: The classic case before the last war was of the "fighting companies" in the electric lamp manufacturing world whose object was not to produce good value for the consumer but to put out of business the regular manufacturers who were in competition with the "fighting company".
      Mr. Jenkins: I should not have thought that anything in the history of electric lamp manufacture could be in favour of those who wanted to defend a restrictive practice of any sort. I imagine that reticence about that would be the best policy for those who believe in restrictive practices whether in resale price maintenance or anything else.
      There is a problem here, but it is of much smaller dimensions than is commonly assumed. The practice of loss leading is less widespread and will continue to be less widespread than is often assumed. The harm that can be done can be exaggerated, although I do not say that no damage can be caused in certain circumstances. It is, however, a problem which it is particularly difficult to deal with by legislation. I do not say that it is not something with which the Government should concern themselves, but I think that it calls for a rather different approach.
      The American approach, by the Federal Trade Commission, might be a more satisfactory method. Under this system, a complaint can be made, and then the Federal Trade Commission is able to go into the complaint, looking at what is being done from the point of view of the retailer, manufacturer or whoever it may be, differentiating between certain practices which may, on the face of them, look almost the same but which, in fact, have different motive?, and different consequences.
      1074
      I feel that we should get away from the rigid approach of dealing with the problem too much in terms of margin. The right hon. Gentleman himself spoke about this, and I agree with him. The Federal Trade Commission goes into the matter and if it thinks that there is an abuse, it issues a "cease and desist" order which comes into effect within 28 days unless an appeal is lodged, in which case the question can go to the Federal court in certain circumstances.
      It is a difficult problem to deal with by legislation, and that might be a better approach. However, it is not the approach which has been chosen. I say frankly that I am sceptical of the legislative approach in the Bill and in any Amendment which the Secretary of State has brought forward. The Amendment is better than the original Bill, and I think that it could be made a little better still by one or two further Amendments, although it could be made worse by others. On the whole, I think that we should not exaggerate the extent of the problem and we should be sceptical about dealing with it by legislation.
      Mr. Hirst: We have had a very interesting discussion, of almost Second Reading dimensions, and I do not wish to say very much at this stage. I am well aware of the procedural difficulties, which I naturally accept, or not being able to talk about the Amendments to the Amendment now before us. However, the Chair has very kindly selected my new Clause No. 6, Loss Leading, to be discussed with Amendment No. 179, and on this I should like to say a word or two in response to the right hon. Member for Battersea, North (Mr. Jay), who referred to it.
      My hon. Friends and I considered that Clause 3 as originally drafted was not effective. Because we thought it ineffective, we put down the new Clause quite early in our proceedings. However, as everyone knows, one does not always hit quite the right point first time. We were anxious to include in the Clause all the possibilities which we could foresee at the time and make the thing more effective. I agree that it goes further than my right hon. Friend's Amendment, but I am not sure that the Amendment, although I broadly accept it, is altogether workable.

      1075
      I think that it will be more difficult to work, for obvious reasons, although I entirely accept his thinking in the matter. He is not prepared to go so far as the all-embracing sentence with which the new Clause starts, which would declare that loss leading is in itself unlawful. Of course, if one did accept that, it would make the whole situation much easier to control. However, I acknowledge that there are other arguments and I have been persuaded that it would go too far.
      Therefore, I accept, as, I am sure, many of my hon. Friends do, the broad terms of the Amendment which we are discussing now, conditioned by the slight hints that we can discuss Amendments later. Some of us take exception to some words in subsection (2,b), and I think that there is every possibility that we can do something about it in due course. This is our difficulty at the moment in discussing the matter in detail, because we are governed by what may or may not happen when we come to the next stage of our debate.
      I appreciate that, as my right hon. Friend said, this is a less rigid approach. Many of us felt somewhat concerned about the rigidity exhibited by Clause 3 as it stood. Of course, it has been difficult. I do not blame my right hon. Friend or anyone else, and I hope that no hon. Member on either side will blame my colleagues or me for trying to draft something different. We are all the time trying to get away from rigidity, but we were sensible enough to realise that there are difficulties in making the thing less rigid. There is no argument between my hon. Friends and my right hon. Friends in the Government or between both sides of the Committee in our desire to see genuine competition. Nevertheless, we felt that there was a danger in loss leading which could lead to unfairnesses between retailers and in certain manufacturing industries.
      I have had some experience of such difficulties in my time. Although I am not connected with the business today, there was a time when I and those with whom I was associated found that loss leading on a particular line did lead to annoyance on the part of other retailers and interrupted our business considerably. We had to take action by
      1076
      putting the particular article on what was then called the Proprietary Articles Trade Association list to protect it—not that we wanted to do so, but because we were forced into that position by a substantial number of retailers saying to our travellers that, if this sort of thing went on with our line, they would not stock it.
      It is a marginal point, but it is one about which I can speak, to a certain extent, from my experience. When one is in the retail distribution business there should be a fairly large measure of good will between the suppliers and manufacturers, on the one hand, and the retail customers, on the other. That is precious to any business. It makes a lot of difference to the type of person that one can get as a sales representative and to the general morale of one's business.
      This is a very difficult thing to argue about. Many of us have had personal experience of it and many hon. Members will know what I am talking about. It is not obtuse or peculiar. There is a genuine advantage in having a tidy relationship and a happy atmosphere throughout the various chains of distribution. As I have said, I do not exaggerate the point. It is quite marginal and probably is not as important as many people think and will not be as important as many people fear.
      But the honest answer is that there are possibilities, for obvious reasons, of a great deal of damage being done or an interruption or disruption of business if resale price maintenance went than there are at the moment. There is an understandable fear on the part of many people in the distributive trade that this happy and sound distribution system will be disrupted. If, as many of us think, this is a relatively marginal matter, there cannot be any great harm in trying to take steps to protect it.
      If some advantage might accrue to the consuming public, we might have to take a different view, but this is a matter of honest difference. I spent 37 years in the distributive pharmaceutical business and I have some experience of it, although I am not in it now. I have already declared in this Committee the various interests which I have, and which are marginal compared with what they were before. If I felt that this proposal would be such a great boon and

      1077
      advantage to the consuming public, I should have the greatest possible difficulty, in spite of my allegiance to the people with whom I have dealt in business for many years, in maintaining the view that I hold with the strength and candour that I have often expressed in this Committee and outside. But I just do not believe that that will be the case.
      If this is not a serious point, it does not really matter. There is a feeling in the country that something should be done about resale price maintenance. It has done a good job of work, and I thank my right hon. Friend the Secretary of State for having met us concerning principles, which I do not share with him, in this legislation.
      As I say, if I thought that the abolition of resale price maintenance would be of advantage, I should have to examine my outlook. However, from my experience, I am convinced that this is a valid point, having seen the growth from the very early stages of the Proprietary Articles Trade Association and having inherited so much in the way of experience from my father and uncles and realising the chaos that there was before resale price maintenance came into operation and the disruption which there was in the retail trade and the concern of people who worked in the shops. As I say, I do not think it is as big as has been made out. It is, however, something which the Committee should face and we should take reasonable steps which do not invalidate the Bill's principles to meet it.
      This is what we have been trying to do. My right hon. Friend has tried to meet us and agrees that this is a better way of going about the matter than was envisaged in Clause 3 as it was originally drafted. There is, however, some danger in the word "supplier", in paragraph (b) of the proposed subsection (2). If we cannot meet that, we shall have wasted all our time. But if we can meet it, and if we can allow my right hon. Friend to keep the validity of his own arguments and yet meet us in this Amendment, all the time and effort will have been worth while, and I for one am grateful.
      6.45 p.m.
      Mr. Winterbottom: While a cut-price policy does not involve a policy of loss leaders, nevertheless, in most cases, cut
      1078
      prices include a policy on the use of loss leaders. But in some cases loss leaders are used without any price cutting at all. That should be clearly understood. I want the Secretary of State to understand it, because unless he understands it he cannot realise how foolish is this new attempt to deal with the situation. It is a case of Tweedledum and Tweedledee. The attempt to deal with the matter in this Amendment and the attempt to deal with it in the Clause as originally drafted are bad. Both attempts are completely divorced from a knowledge of the problem.
      Let me deal with loss leaders. I want to give two illustrations. One of my hon. Friends used sugar as an illustration. He was interrupted by my hon. Friend thy Member for Jarrow (Mr. Fernyhough). There were occasions in the past year when, by wise purchasing, some retail establishments were able to sell sugar as a loss leader against competitors and yet make a tremendous gross and net profit from the sale of that sugar. There have been times when, by wise buying on the market, they have bought cheaply and, due to the phenomenal rise in price they have been in a very happy situation vis á vis their competitors. How would we deal under this Clause with that type of loss leading?
      Mr. Proudfoot: I do not think that anyone in this country is clever enough to buy sugar and to do that with it, because politics became involved with sugar a long time ago. That is not good buying; it is just good luck.
      Mr. Winterbottom: To reply adequately to the hon. Member I should have to start on a process of education on the distributive trade which would take far too long for this debate.
      I want to quote my own experience. There was a time when I organised a body of girls in the trade union movement. They were employed on prepacking commodities for grocery establishments, such as self-raising flour, pepper, and tea
      Incidentally, I have analysed the pricing of Typhoo tea and have found that, to the manufacturers, there are no general variations in the prices of this tea or of Nescafé throughout the country. Thus, the argument concerning the manufacturer is quite right.

      1079
      I will now, however, return to what I was saying. There came along a very big—[An HON. MEMBER: "Wolf."]—firm which said to the owner that it required a certain number of cartons of self-raising flour, tea and coffee. He replied that he could not supply that firm since he was already supplying retail grocery businesses. He pointed out that he had insufficient staff with which to take on new work and that he had no room to expand.
      He was told that the big firm would help him to find the capital to expand his business premises and to take on more staff. He agreed. Eventually, of course, that big establishment took over more and more until all the small grocers in the area were squeezed out and the whole of the packing was done for that establishment alone. When that happened, it insisted on a reduction in prices. When the owner of the packing business demurred, he was reminded of the fact that the big firm had supplied the capital for the plant he was using, so that it could enforce its will.
      The owner of this packing business finally committed suicide. His place is still in the hands of the big firm. That is not a matter of resale price maintenance, but of direct price maintenance. How will this Clause apply to that? Because of the direct relationship between the firm and the packing business, the firm had complete control over wholesale prices. Such a firm can insist on a price conditioned by cut prices for the loss leaders in its shops. That is one of the factors we must take into consideration, but it has been completely omitted in the Bill so far.
      In practice, r.p.m. has been abolished in the grocery trade for a long time. The Bill will prevent many small shops from dealing with the problems of stock turnover in the simple ways which they have used in the past. The Amendment refers to clearance sales. What are these? If a small grocer finds he has over-ordered he will "reduce to clear". Is that a clearance sale according to this Amendment? Does clearing one commodity constitute a clearance sale?
      When I was manager of a shop I suddenly received £1,000 worth of shaving cream, to each packet of which was attached a free razor. If only I could
      1080
      have those razors now! There are a lot of people I see walking about the streets of London for which a use could be found for them. Certainly, I had no use for them at the time.
      Eventually, I had to sell each packet of shaving cream, with razor, for 2d., just to get rid of the stock. Through the process of what is called "leakage", in a shop one has to find, over a long time, ways of meeting capital involved in such over-stocking so that stock-taking and turnover will be right. To keep my job I had to try all sorts of things to cover that £1,000. That is what will happen to the small shopkeeper. He will do all manner of things to preserve his identity and the service he gives, because of close proximity to the customers. If, by mistake, he over-stocks such things as Easter eggs, and has to reduce their price later so as to clear the stock, he should have some consideration. He will not get it under the Bill as drafted.
      I do not approve of the original text of this Clause. But nor do I approve of this Amendment. I am on the horns of a dilemma. I hope that, even at this late stage, the right hon. Gentleman will find something which will clarify the question of clearance sales, because it is not what he says now which will count in the future. It is the wording of the Bill which will matter in the courts. I hope, therefore, that there will be clarification so that undue penalty will not be placed upon the small shopkeeper.
      7.0 p.m.
      Mr. Maude: I confess that I find myself much more in agreement with the arguments of the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) than those of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), although I recognise that my hon. Friend the Member for Shipley (Mr. Hirst) made a persuasive and, I think, convincing case for doing something of a precautionary nature to deal with the problem of loss leadering, whatever may be its size and severity.
      What worries me slightly—and this is the only reason that I intervene to seek some reassurance from my right hon. Friend—is that perhaps this Amendment goes, as suggested by the right hon. Member for Battersea, North (Mr. Jay), a little further than was originally intended in dealing with loss leadering.

      1081
      The hon. Member for Sheffield, Bright-side (Mr. Winterbottom) raised some pertinent points about clearances and reductions, but I believe that there are two more important points than those. The right hon. Member for Battersea, North questioned the words
      "…any goods of the same or a similar description, whether obtained from that supplier or not."
      He suggested that this might enable other manufacturers and suppliers of different goods, not necessarily of the same brand, to withhold supplies from the retailer on a basis which might come very near to that of a collective boycott or other conspiracy, such as we thought we had got rid of under the 1956 Act. I find it very difficult to believe that this could be held to be the meaning of the Amendment, but a number of my hon. Friends and hon. Members opposite would like some reassurance about it.
      The other point is that the definition in respect of seeking to attract customers may lend itself to a much wider interpretation than was intended. For example, I should have thought that the department store which, whether at a particular season or throughout the year, puts on a particularly attractive window display, often with a single theme running the whole range of the windows, does so often not simply to sell that particular class of goods, but to make the shop attractive and get people into it. It would have to be very careful to make sure that it could be judged to be trying to make a profit out of those goods, or, I suspect, it might find itself in trouble.
      This is a matter which requires careful consideration and I hope that my right hon. Friend will be able to assure us that normal and innocent trading practices will not be penalised by the Amendment.
      Mr. Paget: I apologise to the Committee for my voice being in rather bad shape. I have found myself in more general agreement with the hon. Member for. Shipley (Mr. Hirst) than with anybody else who has spoken in the debate so far. Like him, I tend to take the view that, on the whole, people are inclined to know their own business best. When, over many years, one has
      1082
      seen emerge a system of trading such as that involved in resale price maintenance and methods of distribution which most of us would agree to be better than are to be found in other countries we visit, one cannot say that it is a bad system.
      None the less, if the right hon. Gentleman decides that it is against the public interest, that is a decision which he is entitled to take. As the Minister, we make him responsible for the public interest and he is entitled to say, as he does in Cause 1, "Since I hold this to be against the public interest, you may not go to the Court to have it enforced". I would not argue that. Quite reasonably, we do the same with gambling. I never fed that one should make contracts with the idea of going to the Court. Frankly, I would rather be guided by my Quaker ancestors who said, "If thy friend cheat thee once, blame him; if he cheat thee twice, blame thyself".
      Where I take violent exception is that in Clause 2 I find Parliament enacting that I should go to him to be cheated a second time, to the man who has defaulted on the contract I have made with him and with whom, because he has so defaulted, I am compelled to deal again. Therefore, I favour this provision simply because it is a limitation on the outrageous provisions of Clause 2, which I cannot believe we shall eventually allow to become law. Anything which limits the outrageous provision which says that I have to deal with a defaulter, with a man who has cheated on the bargain he has made with me and that for that reason I have to deal with him again, has my support.
      I am concerned that the Clause should be so inefficient, as I think it is. In an intervention, I asked whether the profit mentioned in the phrase
      "not the purpose of making a profit"
      in subsection (2) of the Amendment was a gross or net profit. The hon. Member for Twickenham (Mr. Gresham Cooke) said that the meaning was a matter for debate. We often find that inadvertently the meaning of what we legislate is a matter for debate, but that is hardly an argument for not debating it in advance. What we should try to do is to make our meaning plain.

      1083
      I therefore ask the right hon. Gentleman, here and now, if he will help. In the words
      "not for the purpose of making a profit"
      does he mean a gross or net profit? Surely that is a straight question to which we are entitled to a straight answer.
      Mr. Jay: Surely net profit is what is meant. If the provision makes any sense, it must mean the profit the retailer makes over and above his costs. Can the right hon. Gentleman assure us that that is what he means?
      Mr. Paget: Does the right hon. Gentleman agree? Is it net profit?
      Mr. Burden rose—
      Mr. Hale: Do not let the hon. Gentleman tell us. We shall become very confused.
      Mr. Paget: It is very odd that the right hon. Gentleman should ask us to accept an Amendment in which the whole guts of the matter is whether it is a net or gross profit.
      Mr. Burden rose—
      Mr. Paget: It will save the time of the Committee if the right hon. Gentleman will tell us.
      Mr. Burden rose—
      Mr. Paget: I am sorry, but I shall not give way to the hon. Gentleman. If it is merely a gross profit, the argument is quite different. Is it gross or net?
      Mr. Burden rose—
      Mr. Paget: No, I want it from the Minister.
      Mr. Hale: We cannot have understudies.
      Mr. Heath: I will reply to all these points when I answer the debate. I cannot keep jumping up to answer each point in turn.
      Mr. Paget: I have never known a Minister who, when asked a direct question in Committee about the meaning of his proposal, has refused to state it. I have been here a very long time, even longer than the right hon. Gentleman, but I have never heard a Minister behave like that. If we have to assume that he has to wait for the Official Box
      1084
      to tell him what his proposal means, I must apologise for making a somewhat lengthy speech to deal with the matter upon the two bases.
      The proposal is that action shall be taken against the supplier for refusing to supply goods to a certain customer. It is established, or admitted, that refusal to supply those goods is because the customer has been price cutting either the supplier's goods, or goods of the same class from another supplier. The burden of proof is then upon the supplier to prove that it comes within the price cutting in Clause 3 which is an exception.
      Let us look at what he has to prove. If it is gross profit, he has only to prove that the goods were sold at less than the price paid for them. I presume that that would be a relatively simple thing to prove, but it would not establish what I think hon. Members on both sides of the Committee have asked for in this form of protection. It would not come anywhere near to protecting the supplier from having his goods used as loss leaders. I would assume for the moment that simply to say that it is gross profit here referred to is to put it in exactly the same position as it would have been under the Clause which has now been withdrawn, and I therefore assume that it must be net profit.
      Mr. Proudfoot: Would the hon. and learned Gentleman like to say the period over which the net profit is assessed? Is it one day, one week, one month or one year? Because of that difficulty, his argument falls to the ground.
      Mr. Paget: On the contrary, I should have thought that the argument for this Amendment falls to the ground because, as so often happens with interventions, that is the point to which I was coming. If the retailer has to prove that this is sold not at net profit—and I think that the words
      "not for the purpose of making a profit"
      must mean a net profit because one does not sell something for the purpose of making a profit if one sells it for the purpose of making a net loss—as the hon. Member for Cleveland (Mr. Proud-foot) asked, how does one arrive at it?
      We still do not know the procedure by which this Court will work, but if it is analogous to the way in which the

      1085
      High Court works in other Departments, the only way to arrive at it is to have discovery of documents. That would mean that the man charged with price cutting would have to disclose all the documents which were relevant to the question of what was a net profit. He would have to disclose all his books and accounts for an investigation by an accountant to see how overheads were carried and whether the profit amounted to a net profit or not.
      7.15 p.m.
      Is that really the sort of thing which it is fair to ask any trader to do for the benefit of somebody within his trade who is quarrelling with him and who is under no obligation not to make all these internal and secret matters of his books public? If this is to have any reality at all, it means that an investigation of the books of the retailer must be at the disposal of the wholesaler or the manufacturer who relies on this Clause.
      The next point is the question of motive, which is the second thing which must be proved. The sale must not be for the purpose of advertising or for the purpose of encouraging the sale of other goods. I wonder how spare parts come into this. Are they sold with a view to encouraging the sale of other goods? Is the sale of spare parts designed largely to encourage the sale of motor cars, or whatever it is? Are spare parts organisations set up for that purpose?
      We come next to the exceptions, and we are told that it is an exception if the sale is part of a seasonal or clearance sale. I have some idea of what a seasonal sale may mean, but I would be grateful if the right hon. Gentleman would tell us which sale is not a clearance sale. I do not pretend to have any special expertise on this, but as far as I am aware a shopkeeper buys a line to clear it by sale. What sale by a shopkeeper is not a clearance sale; a sale to clear what he has bought for the purpose of clearing by sale? If every sale made by a shopkeeper is not part of a clearance sale, what is it?
      The right hon. Gentleman is really in favour of loss leadering or anything which would cut prices, on the sort of old Manchester school idea that anything which pushes down any price to a minimum is somehow to the benefit of
      1086
      the public. That is his real philosophy, Within that, of course, loss leadering is something which reduces prices on something, and, therefore, in his heart he is in favour of it. As a concession he put in a loss leader Clause which did not mean anything because it was applied simply to the point of a sale below costs price.
      Under fire from his supporters the right hon. Gentleman has tried to replace that provision by fog. He has put forward another Clause which means nothing at all, which is utterly unworkable, which is nonsense, and the object of which is not to provide for anything in the Bill but to fob off his supporters who criticised it.
      Mr. Burden: I think that the hon. and learned Member for Northampton (Mr. Paget) is in a little difficulty in expecting shopkeepers at the moment when they receive an article, to be able to determine what the net profit on it will be at the end of the year. The fact is that accountants tell a shop keeper what notional mark-up he should have, but whether or not a profit is obtained is not determined until the accountants have examined his books at the end of the year.
      Subsection (2) of the Amendment says that
      "the use of goods as loss leaders is a reference to a resale of the goods affected by the dealer, not for the purpose of making a profit …"
      The question whether it is net or gross profit is a matter for determination. It is impossible to determine early on whether there is a net profit.
      Mr. Hate: Which? carried out an interesting and instructive survey on sausages. There was a great variety of content, but it showed that quite a number are sold under resale price maintenance arrangements. Is the hon. Member saying that before a retailer of sausages decides whether to sell them cheaply he has to wait for 12 months to estimate his costings? Or is he really talking about an industry of which he knows something?
      Mr. Burden: The hon. Member is an eminent lawyer, but he does not know much about the retail trade. I doubt whether the retailer to whom he refers would sell only sausages. His profit would arise from the sale of the whole

      1087
      of the merchandise within his shop. Whether or not he would make a net profit over the year if he sold only sausages would presumably be determined by the number of sausages he sold. It is not worth labouring that point now. It is a matter of accountancy, and with great respect to the hon. Member he shows that he does not know much about running businesses.
      I must declare an interest in this matter as a manufacturer and also a general warehouseman. But my manufacturing business does not deal in r.p.m. goods, and the wholesale business does so only to a very small extent. I believe that if the conditions indicated by my right hon. Friend come about as a result of the Bill I should benefit by the abolition of that method of trading.
      The hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said that at the moment there was little indication of loss leadering to any extent. I am sorry that I missed my right hon. Friend's remarks about that argument. I gather that he said the same thing. But the hon. Member for Stechford then pointed out, quite legitimately, some of the difficulties that might arise if loss leadering continued. To some extent the Committee seems to have lost sight of the fact that the goods of any manufacturer who goes before the courts and is allowed to retain r.p.m. cannot become the subject of loss leadering. Neither can manufactured goods of any manufacturer who declares his intention of going before the courts, and which are now subject to r.p.m., be the subject of loss leadering before the courts have declared upon them.
      Therefore, the main problem which may face many small retailers is that which faced small retailers in Canada when r.p.m. was completely abolished there. In the public image an r.p.m. article still bore a price and was still of a quality which had been recognised for many years and people cut the prices of those articles in order to attract business, without any intention of making a profit on them, thereby creating great difficulty for many small traders.
      The great danger of loss leadering in this country would arise in the case of nationally-known and nationally-advertised goods which had formerly been
      1088
      subject to r.p.m. but which the courts decided should not continue to be so subject. In that case many large firms would be encouraged to slash the prices of those articles, because the public would continue to recognise their value. That is where great difficulties could be caused to the small shopkeeper. He would not be able to have a sufficient spread-over of articles to enable him to compete with larger firms in cutting the prices of such articles. In his case they might make up a very large part of his trade.
      I hope that my right hon. Friend will keep a special watch on the situation during the period immediately following the abolition of r.p.m., because the whole thing will level off later, and many of the problems will disappear. To begin with, however, most of the large retail groups and stores will introduce their own branded lines to replace those cut out by the abolition of r.p.m.
      What must also be remembered is that those lines will be sold with the full mark-up in the stores that produce them and have the right to possess them as their own branded lines. Difficulty will arise in respect of the already well-known branded lines, because the large retailers who previously bought them in bulk will prefer to have their own branded lines, and because of the cut-back in production the prices of the well-known branded lines will be increased to the small men. That is the major difficulty.
      I am pleased that my right hon. Friend has shown flexibility here. I want to impress upon him again the fact that it is only in respect of those goods on which r.p.m. has been abolished that loss leadering can be employed; it cannot be used in respect of those goods where r.p.m. has been maintained. The danger period is the period following the abolition of r.p.m. on any branded line which is well known to the general public.
      Sir D. Glover: It is true that the multiple stores will produce their own lines, but my hon. Friend should remember that they will have to come from somewhere, and that they will probably come from the same factories which now sell the well-known branded lines. He is an experienced distributor, and he will know that what will probably happen is

      1089
      that the same article will have one hat on in the independent shops and another hat on, under another name, in the chain stores.
      Mr. Burden: I agree, but that will not prevent the activities that I have mentioned, because the goods will have different packages and different names, and the large stores will be able to charge what they like. That may lead to a form of "phoney" loss leadering. A smart trader may buy an article whose intrinsic value is 2s., but because it is produced under a different name, and specially for him, he will be able to mark it up at 3s., with a notice saying that the price is slashed to 2s. 6d., which will mean that the public will pay 6d. over the proper price, and still not get good value.
      Mr. Crosland: I doubt whether the Clause is enforceable or sensible. I want to echo the question that has already been asked, namely, to what extent can the Clause lead to some form of collective boycott, and not simply to activities by individual manufacturers? Let us suppose that a tobacconist cuts the price of a little-known brand of cigarettes, produced by a small manufacturer. Is it a possible consequence—since, in the normal way, he will also sell the products of the Imperial Tobacco Company and Carreras—that the large manufacturers will cut off his supplies? There is some doubt among hon. Members as to how far the Clause goes.
      Mrs. Freda Corbet: Any sensible tobacconist would not use such a line to attract custom.
      Mr. Crosland: That does not affect my argument. Let us suppose that the tobacconist cuts the price of Players. Would that mean that in future he will not be able to get any Carreras?
      Mrs. Corbet: Let us suppose that he cuts the price of Players. I should have thought that in the case of a line of such wide consumption it would be fair for him to be denied supplies of Carreras cigarettes. That would really be a form of loss leadering.
      7.30 p.m.
      Mr. Crosland: I want to know what would be the effect upon the supplies of a wretched tobacconist if he cut the price of one brand, whether it was
      1090
      a product of the Imperial Tobacco Company or Carreras.
      On the whole, I do not feel very enthusiastic on the Amendment because, like the Secretary of State and my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), I think that the problem of loss leadering, loss leadership or whatever we are supposed to call it is enormously exaggerated in popular discussion. One reason why it is exaggerated among small retailers particularly is that they assume that loss leadering is going on when the large retailer is selling at lower prices only because he has a quantity discount or rebate.
      A situation could easily arise, and constantly does, that because a large multiple store buys so much more cheaply, ii can sell at a price which gives it a [profit but at a price at which a small retailer could not sell except at a loss. In those circumstances, the small man naturally thinks that the multiple store or supermarket is going in for loss leadership, whereas it may be simply passing on to the consumer the advantage derived from quantity rebate. This is one reason why a great deal of unnecessary apprehension exists as to the extent of loss leadering as such.
      My view is that expressed by the hon. Member for Gillingham (Mr. Burden), that what will happen immediately the Fill goes through is that when a manufacturer loses a case in the court, there will be a temporary spate of loss leadering on one or two sensational goods. Wit saw it, when the Bill was announced on whisky and the like. It may be a possible temporary danger, but it is not likely to last long and things will then settle down. Whatever the extent, however, I wish to take up one or two of the questions which have arisen about how damaging the practice is and to return to the point raised by my hon. Friend the Member for Stechford about what risk there is of serious damage to manufacturers.
      I repeat my earlier question and the point I male when interrupting the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The fact is that practically no examples are given from Great Britain of damage to manufacturers as a result of loss leadering. We read a great deal about how their production

      1091
      lines can be disrupted and how their forward planning is impossible because they do know at what prices retailers will sell. When, however, one comes down to facts, I know of no quoted instance of a manufacturer being seriously damaged in this way.
      One or two examples have been given in the grocery trade of goods being used as loss leaders. The example of tea was given by the hon. Member for Lowestoft (Mr. Prior). As my hon. Friend pointed out, that proved the reverse—that the Typhoo tea manufacturer gained enormously compared with his competitor because the particular brand was used as a loss leader. Another example given by an hon. Friend of mine was that of sugar, which has been used as a loss leader over the last two or three years. It is the most traditional loss leader in our grocery trade. What sugar manufacturer has suffered desperately over the last few years as a result of this? I have noticed no sharp diminution, for example, of the profits of Tate and Lyle, who appear to view the whole situation with general indifference.
      Take another example, probably the most common loss leader of the last five or six years, Nescafé or instant coffee as a whole. Two cases, Nescafé and Maxwell House, have persistently been used as loss leaders ever since r.p.m. broke down in the grocery trade. Nobody can say that these two items have been used as loss leaders and have damaged the manufacturers. Very much the reverse is the case. The use of these goods as loss leaders has tended to reduce the retail price and this has been one of the factors leading to the demand for this type of coffee in the last five years.
      I emphasise this point because we have had several years without r.p.m. in the grocery trade. If the loss leader problem was as widespread and the results as damaging to manufacturers as some hon. Members opposite assume, we would have had a great number of examples of well-known manufacturers saying that they have suffered serious damage as a result. The fact is that no examples are ever given. This seems to me to be conclusive.
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      My doubts about the wording of the Clause are not that it does not go far enough, but that it conceivably goes too far. It bans the use of prices as a promotional aid. None of us is against retailers using promotional aids in other respects. As one hon. Member said, we do not object to the use of elaborate window displays or to straight advertising. Some of us object to trading stamps, but many others do not. We do not object when a store in a constituency gets a film star or someone from "Coronation Street" to open it as a promotional device. In fact, in some cases, we do not object when prices are used as a promotional aid. Very often, a large store may have a car park for the use of which it makes no charge to customers. That, again, is a promotional activity which forgoes possible profit on the space taken up by the car park. All these forms of promotion are quite respectable and are part of the efficient competitive economy and generally we encourage them.
      There is, however, one form of promotion—that people should cut prices in the way described simply to increase their share of trading in a locality—which is, apparently, wrong and wicked. This view goes very far and is inconsistent with the rest of our attitude to what retailers are expected to do. I am, therefore, unhappy about the Clause for this reason.
      I very much follow my hon. Friend the Member for Stechford in saying that the right approach to loss leadering is not in those terms of practice, but is in terms of what one is trying to stop. I am not trying to stop in all circumstances the use of lower prices as a form of promotion. That seems to me to be quite wrong and to go much too far. One is trying to stop, first, what the Americans call predatory price cutting—that is, price cutting by a large store for a limited period deliberately designed to drive the small man out of business, with prices being raised again as soon as that has happened. That is our first object.
      The second thing which we are trying to stop, if it exists, as to which I am sceptical, is the use of loss leaders on a particular article so persistently that a high-grade manufacturer really suffers from it. If that occurs, which I doubt, we are trying to stop it. I add also a

      1093
      third point which, I know, the Secretary of State does not consider relevant to the Bill and to the Clause, but which I regard as highly relevant, and that is double pricing. On grounds of honesty, we should have legislation to curb or restrict the practice of the retailer putting on a tin of Nescafé or anything else an imaginary price which is crossed out and a much lower price inserted, usually by hand. Double pricing is, generally, a highly dishonest practice by which the retailer is intended to give the impression that he has cut the price of goods far more than is the case.
      As many hon. Members may know, the French have elaborate provisions designed to restrict the use of two prices. They provide in general that a retailer can put only one price on any goods unless he is cutting the price below the manufacturers' marked price. Only in those circumstances can the retailer show both the recommended price and, beneath the price at which he is selling the article. Apart from that exceptional case, the practice of double pricing with the impression of bogus price reductions, is prevented by law.
      Double pricing not only confuses the consumer without giving any corresponding benefit, but it is one of the things which alarms the small retailer and gives him much more anxiety about his future than he would otherwise have. Therefore, if we were able to eliminate this practice, it would in some sense be a safeguard for the small retailer.
      My solution, therefore, would not be that which is proposed in the Amendment, but would be threefold. First, I agree with my hon. Friend the Member for Stechford that ideally one needs a court, commission or tribunal before which either retailers or manufacturers must prove definite proof of injury, the injury being danger of being forced out of business on the part of the small retailer or total disruption of production in the case of the manufacturer. Any other form of price cutting which did not produce that positive and proved injury but was simply promotional could be permitted.
      Secondly there should be legislation against double pricing to eliminate a great deal of dishonesty, hypocrisy and bogus price cutting.
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      Thirdly, there is a point which has often been mentioned in these debates by the hon. Member for Cleveland (Mr. Proudfoot), about small retailers. I strongly plead that they should not take so pessimistic an attitude to loss leadering and r.p.m. If they have any gumption—as I am sure they have—they will follow the example of the grocery trade and band themselves together, as was done in the United States in voluntary chains and co-operative organisations of one kind or another.
      One becomes exhausted by the rather defeatist pleading which goes on. The remedy has been exercised in a number of trades in this country, and in many trades in other countries. As soon as the Bill goes through, if there is a serious danger of loss leadering—which I think is exaggerated—I believe that the independents will respond by banding themselves together and fighting it out on their own ground.
      Mr. Norman Cole: I put my name to this Amendment a week or two ago and, having heard the debate, I have found no reason to change my views. It may be well to remember the purpose for which this Clause, including this Amendment, is designed. It is designed to provide an alibi to the manufacturer who withholds supplies. We have gone a little way from that in trying to look at the definition of the alibi.
      This is giving the manufacturer when he comes before the Restrictive Practices Court a defence when he is asked why he adopted practices referred to in Clause 2. This very much covers the purpose of the Amendment. It is not laying down the law for each and every person in the country to observe once the Bill becomes an Act. It does that certainly, but, more important in many ways, it lays down a framework for a manufacturer brought before the Court and asked to give reasons why he has acted in this way. It gives him an opportunity to produce a clear and definite reason. Whether the Court agrees is a matter for the future to show.
      If I were a manufacturer in this position I should do what I think most hon. Members would do. I would link several parts of this Amendment together. The Amendment says:

      1095
      "not for the purpose of making a profit on the sale of those goods, but for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods".
      Those two items live together. In this debate we have made very heavy weather of the question of, what is a profit? If a man has a tin of peas which he bought for 1s. and sells at 11d. or 1s. 0½d. the chances are that he is not making any profit within any commonsense definition of the term. He is certainly not making a profit arithmetically. Before the right hon. Member for Battersea, North (Mr. Jay) interrupts me, I should say that I am aware that ½d. is a twenty-fourth of 1s. The acid test is whether or not a man was making a profit on one article, or perhaps on five linked in a packet, and whether or not he could make a living if he continued in that way.
      Mr. Jay: If a man buys a tin of peas for 1s. and sells it for 1s. 0½d. he makes a gross profit. The point the hon. Member for Bedfordshire, South (Mr. Cole) is making is exactly what we are saying. We want to know whether the Bill says that is a gross profit or a net profit.
      Mr. Cole: If the right hon. Member had listened to me, as I am sure he usually does, he would have noticed that I said ½d. is a twenty-fourth of 1s., but that it did not contribute a real profit to the man concerned. In discussing this Amendment we should not get bogged down. Judges are not foolish; neither is the Court. It will know if a man is selling either regularly or on one occasion only at a microscopic gross profit, that he is selling to attract custom.
      7.45 p.m.
      I return to the point about whether he is doing so to attract more customers to his establishment. I think most people can appreciate and evaluate that. If I were a manufacturer I should have people standing about in the shop to see how many customers bought the item concerned. I should not worry about halfpennies or shillings. This Amendment is perfect common sense. My right hon. Friend has been wise to call it profit and not to be too particular about it. This is a good shot at trying to cover an admittedly difficult procedure.
      My hon. Friend the Member for Gillingham (Mr. Burden) pointed out one
      1096
      device which will grow when the Bill becomes law. I hope that hon. Members do not think that is the end of the story. The moment the Bill becomes law there will be a hundred and one different methods found to perpetuate those parts of trading which are legitimate in which resale price maintenance is found but which are in the public interest. They will be methods by which the dealer and the supplier can maintain their proper positions.
      We cannot anticipate all the trains of thought that all those gentlemen will bring forward in future. The most we can do is to put a commonsense view. We should say to the judges, "This is what Parliament means." The judge will ignore our speeches and it is right that he should do so, but we should say, "This is what Parliament means in general and we expect you to apply it in a commonsense manner." The provision is designed for the use of the manufacturer to plead his defence. If he does not do so satisfactorily, he will be found to be breaking the law.
      Reference has been made to goods put on the market and used promotionally. It is a fairly safe bet— I have an interest in this which perhaps I should declare—that if someone is using a loss leader promotionally he is doing so with the consent of the manufacturer of the product. He may be lined up with national advertising on television and in other ways. We should not overlook the importance of paragraph (b), at the end of the Amendment. There might be an out of date type of canned goods which a manufacturer would like to have removed from the market.
      We should not assume that there will always be disparity of interest between the manufacturer or supplier and the dealer. Often, there will be amity among them in an effort to get rid of these things—to get them out of the way—but they cannot afford to throw them away. It is not the dealer who puts the reduction of 3d. on the manufactured packet. That is done by the manufacturer, to get rid of it.
      Mr. Lubbock: Suppose an article becomes obsolete through technical change and the retailer finds that he still has some of those articles on his hands. He goes to the manufacturer

      1097
      and says, "May I sell this at a much lower price than that at which I bought it?" The manufacturer would have to consider what effect that would have on sales of new articles coming into circulation. He might refuse permission. The wretched retailer would then have these things on his hands.
      Mr. Cole: That is a fair question and deserves a fair answer. If I were a manufacturer I should almost give those things away, so long as it did not damage my trade, or I would link them with a more up to date article. No manufacturer would like to have in the front of the shop out of date articles which merely show what is produced in the past. He would rather that they were absorbed and the retailer was compensated. If the goods are out of date it is in the interests of the dealer, the supplier, the distributor and manufacturer for them to vanish from the scene at the earliest possible moment.
      I plead for a commonsense interpretation. The House of Commons is not a legal body. But I am quite certain that there will soon be a body of case law on the outstanding cases. No one in this Committee would feel himself incompetent to recognise a firm which was selling off things other than in a genuine clearance sale. I take the point made that every kind of business is a clearance sale. That is what people are in business for. We know that the public and judges understand the term "clearance sale", and to make heavy weather out of this matter is less than useful. This Amendment is a very good commonsense way of going on and I personally am in support of it.
      Mr. G. R. Howard: I shall confined my remarks to one point. In moving this Amendment, my right hon. Friend, as I understood him—perhaps he could clarify this point—said that there were certain articles which could be bought definitely for the purpose of including in a sale. If I may put forward the point of view of the photographic trade, I have had it represented to me that there are certain companies which run clearance sales of bankrupt stock, and I am told that they supply bankrupt stock made to be put into these sales. How it is done I do not know, but if this is possible it worries me as to the definition of this phrase.
      1098
      Let us say that a large store is having a clearance or seasonal sale of something completely different from photographic material. It may at the same time undercut and sell as a loss leader photographic materials under the cover of other sales and in this way carry out loss leader sales of photographic material during the whole year. That really worries me. I know that the word "genuine" carries weight in the courts. I hope that the Amendment will cover it, but I am not quite sure that it will. I am told that there are countless cases of people who make a business of selling articles in clearance sales which go on for a whole year. I have a letter from the Photographic Dealers' Association which says:
      "Regarding 'clearance sales', there are some shop; which have 'clearance sales' throughout the year. They specialise in buying up bankrupt stock, or in having stock specially produced to be called 'bankrupt'."
      This is to me a worrying point. Perhaps my right hon. Friend can reassure me when he winds up the debate.
      Mr. John Harvey: I think that the speech of my hon. Friend the Member for St. Ives (Mr. G. R. Howard) and the kind of interruptions that we have had from the hon. Member for Orpington (Mr. Lubbock) tend to underline the importance of defining in the Bill what we mean by seasonal sales and clearance sales. I have put down an Amendment at a more appropriate place in the Bill, but I think that it would be helpful if we could have an assurance from my right hon. Friend that he agrees that, if the terms "clearance sales" and "seasonal sales" are to mean anything, we have to have something in the Bill to say what they mean. I hope that thought has been given in his Department to this, or that thought will be given to it long before we reach Clause 11, because I feel that everyone is entitled to have some idea of what those terms are intended to mean if much of what we are discussing in this Clause is to mean anything at all.
      A number of hares have been started in this debate. The hon. Member for Dundee, West (Mr. Doig) and the hon. Member for Sheffield, Brightside (Mr. Winterbotiom), to mention but two, made some suggestions which I did not regard as feasible when we began this

      1099
      debate. The idea that in some odd way a vendor of Christmas trees with a lot of trees left on his hands on Christmas Eve could be prevented from disposing of them cheaply or that a baker left with a stock of hot cross buns, or cold cross buns, would be prevented from selling them cheaply is nonsense. I cannot conceive that these things can happen under the terms of the Bill, and I think that it is of some importance that my right hon. Friend should nail this sort of thing now before we start any more panics among the more jittery of the traders, who are entitled to wonder how a Measure such as this will affect their livelihood and who will be thrown into even greater confusion if we start the sort of hares that we have had when discussing this matter.
      Sir D. Glover: I intervene on this Amendment only because I put my name to it, and I think that it is an improvement on the Bill as originally produced. Personally, I would sooner that this Clause were not in the Bill.
      Many of the things that I have heard expressed in this debate horrify me. As a retailer myself, I have always held the view that if I am fortunate enough to make a profit that is a good thing, but my real object and exercise as a distributor is to get the wool from the sheep on to the backs of human beings, at the most economic price that the person who is to wear the suit can get it. That is efficient distribution.
      Distribution is a very expensive system throughout the world. It horrifies me when I think of the gross profit that we have to work on to get the goods from A to B into the basket or on to the back of the person who is going to buy them. I cannot see anything more immoral in distribution than one firm deciding to spend 2½ per cent. of its gross turnover on advertising and another firm competing with it deciding to spend 2½ per cent. of its gross turnover in cutting prices. They are both promotional.
      If, instead of paying to advertising agents and newspapers perhaps £50,000 a year, one gives £50,000 in reduced prices to the public, the great mass of the public benefits and not one single advertising agency. When I hear speeches by hon. Members opposite
      1100
      about advertising being a completely non-productive effort and a thoroughly immoral practice, I do not share that view. I think that it is necessary to let people know what there is for sale. If that is accepted, it is an equally good thing for one person to decide that instead of advertising he will become known for offering extremely good value.
      8.0 p.m.
      Let us deal with one or two cases which have been raised. Mr. A has bought some goods and they do not sell. Fie thinks that if he cuts the price he will be accused of loss leadering and will have his supplies cut off. I have had this experience dozens of times. I say to the manufacturer, "I shall sell these goods at half price. If you do not like this, will you take them back?" Very few manufacturers have ever offered to take them back, and in the end I get permission to sell at half price.
      This will happen when the Bill becomes law. If a retailer has something which is not selling, and he wants to get rid of it, he will not wait until the clearance sale at the end of the year but will write to the manufacturer saying, "I have bought a stumer in line B and I have a large stock which is not moving. I propose either to sell it at a reduced price, below cost, or you can have it back. I shall be glad to have your letter by return of post giving permission to sell at a reduced price because I am putting these goods in the shop window on Saturday." If a manufacturer has produced a bad line he will send out many letters saying, "Get rid of the stuff as soon as possible". This happens every day in distribution.
      I believe that my right hon. Friend would perhaps have been wiser to have brought in a one-Clause Bill simply saying, "From August 1st resale price maintenance is illegal." Instead we have other Clauses all trying to protect individual retailers. This makes the law into a lawyer's paradise.
      I do not believe that when the Clause becomes law it will involve many cases being brought before the Court. People seem to think that retailers and distributors are in such fierce competition that they never speak to each other. But I know quite well what will happen. Re-

      1101
      tailer A, having decided that he will run a loss leader, will be telephoned by retailer B, saying "You can carry on until Monday, but if it goes on after Monday I shall take action"; and on Monday he will stop doing it.
      Mr. Hale: The hon. Member is ably denigrating the Amendment to which his signature is attached. In relation to firms which have no great strength or power, the effect will be to render Clause 2 nugatory, because people will be so frightened of proceedings under Clause 3 that they will carry out the obligations under Clause 2 conveyed to them not by the wholesalers but by printed instructions and by memoranda and stick-on labels.
      Sir D. Glover: I do not think that there is very much in that point. I am supporting the Amendment because there are fears—quite unnecessarily—among the independent retailers about what will happen to them as a result of the Bill. I support the Amendment to meet those fears, but I have explained what I think will happen when the Bill becomes law. The intention is to provide a broad feeling that there is some action which they can take, and I hope that this will encourage them in their belief that they have a future as independent retailers. I do not see a great mass of small independent retailers taking the matter as far as to proceed to the restrictive practices court.
      My hon. Friend the Member for Gillingham (Mr. Burden) made a valid point about the manufacturers being asked by large organisations to produce a multiple's own brand. I am worried about what will happen in the first 12 months —I think that it will be 12 months but it may be six months—for some strange things may happen in retailing when the Bill becomes law. People will have a rush of blood to the head. Whisky will be sold at 35s. a bottle—and if I could buy some I should be only too happy to do so.
      But it will not happen for very long, because in retailing there is very quickly found—I know that the hon. Member for Sheffield, Hillsborough (Mr. Darling), with his vast experience, agrees with me—the kind of profit needed on any individual article to make it worth while stocking it. People cannot afford to
      1102
      go on selling at a lower price unless they are doing it instead of spending money on advertising or in some other way. There will be a marginal difference in the prices.
      But this Amendment gives a feeling of confidence to the small retailer. It is a big improvement on the Clause as originally drawn, and I hope that it will provide a far greater feeling of security for those to whom I have referred. For that reason I have put my name to it, and I have no difficulty in supporting it.
      Mr. Edwin Wainwright: The hon. Member for Ormskirk (Sir D. Glover) has not read the Amendment. If he reads it he will find that it is of very little help to the small shopkeeper whom hon. Members opposite want to support. The small shopkeeper gets nothing out of the Amendment, which has been moved simply to try to convince hon. and right hon. Members opposite that it is a safeguard for the small shopkeeper.
      I hope that the Minister will explain the Amendment more clearly. The Amendment gives me the impression that it is imply to help the large combines and the supermarkets more quickly to wipe out the small shopkeepers. It gives power to the manufacturer to be selective. It does not say that the manufacturer must take action against everyone who sells goods at a lower price than that at which they are supplied to him by the manufacturer. There may be two or three large firms of retailers in a district, and a large combine or supermarket may be selling goods at a reduced rate simply to attract customers in order that they will buy other goods. Apparently it can continue to do so.
      Let us suppose that the large combine and supermarket continues to do this for six months, and that suddenly a small shopkeeper tries to compete and similarly reduces the prices of his goods. After six months the manufacturer or supplier can take action against him, which gives a very unfair power to the manufacturer and supplier over the small shot keeper. I am convinced that the Amendment seeks merely to try to convince right hon. and hon. Gentlemen who were opposed to the Bill that the Minister intends to try to help the

      1103
      small shopkeeper. I am satisfied that it does not.
      The hon. Member for Ormskirk (Sir D. Glover) gave the impression that all retailers are of the same size. This is not so. Some retailers are large and substantial. They can fight supermarkets, to some extent. As they can give better and more personal service, they can compete with supermarkets. Smaller shop-keepers will not be able to compete with supermarkets if the Amendment is carried.
      Sir D. Glover: Much of what the hon. Gentleman is saying is true. It is true today. Before the abolition of resale price maintenance, the individual shopkeeper, for whom I am sorry, finds it very difficult to compete with the larger store. However, the object of the exercise must be remembered. It is to get goods from the field or the factory into the hands of the consumer. It is not merely that the abolition of resale price maintenance is creating a change. It is the other way round; the public get cheaper goods.
      Mr. Wainwright: The hon. Member forgets one important factor. There is such a thing as controlled supply as well as ordinary supply and demand. There can be an abundance of goods, but if the supply to the retailer is controlled, or if the supply from the retailer to the consumer is controlled, whatever price can be obtained can be charged. This does not mean that resale price maintenance can be abolished. More supplies going to the supermarket, with the result that the small retailer goes out of business, does not mean that the consumer will get a cheaper product. He might for a short time. My experience is that, wherever the supply of goods is in the hands of a few people, the price of those goods is not fixed at the price at which they could profitably be sold. Because competition has been removed, the price of the goods remains artificially high.
      There is no guarantee that, in the event of the small shopkeeper going out, the price of goods will be, for any appreciable length of time, let alone permanently, lower than it is today. One period must be taken with another, because the cost of living increases by 3 per cent.
      1104
      or 4 per cent. every year. Whatever small benefit may result will be wiped out by the increase in the cost of living.
      I hope that the Minister will explain to the Committee what was in, his mind in bringing forward this weak Amendment, which does not give any help to the small retailer. Power will still remain in the hands of the manufacturer and the supplier to make some concession to supermarkets and large retailers and hit the small shopkeeper whenever he wants.
      Mr. Paget: It would be unfair to the hon. Member for Ormskirk (Sir D. Glover) if one summarised his speech by saying this. In fact, distribution takes place between reasonable people. Price maintenance takes place between reasonable people. The evils of price maintenance have not really arisen. If price maintenance were abolished, there might be a few hysterics for a short time, but we should only return to where we are now and that is why he would not take too tragic a view about it.
      The hon. Gentleman would rather have no Clause at all, but, as the amended Clause means practically nothing, he does not object to it. This is quite a tenable point of view, but it is one which does not accord with those of his hon. Friends who seem to lay store by the provision.
      8.15 p.m.
      Mr. Heath: This has been a wide-ranging debate of very great value indeed. My hon. Friends and hon. Members opposite have contributed a wealth of knowledge and experience on the whole subject of retailing, purchasing, manufacturing and consumption, and also a variety of views about loss leadering in particular, exactly what it is, what it does, to what extent it exists, and what its consequences are if and when it exists. This leaves me a comparatively small number of points with which to deal, because they are points which have been raised on the Amendment.
      Perhaps I could deal with some of the specific points which have been raised before coming on to the three main ones which were raised by the right hon. Member for Battersea, North (Mr. Jay) and echoed by my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) and the hon. Member for Grimsby (Mr. Crosland). There was, first, the ques-

      1105
      tion raised on a number of occasions about the definition of "sales". This was also very often connected with the point raised by one or two hon. Members opposite, in particular by the hon. Member for Orpington (Mr. Lubbock), as to what happens when a retailer has a considerable amount of stock on hand which, for perfectly valid reasons, he wants to dispose of at a much lower price.
      On the question of the definition of "sales" raised by my hon. Friend the Member for Walthamstow, East (Mr. J. Harvey), I think there are later Amendments, so I will not go into that in detail. By the introduction of the word "genuine", if the matter is taken up by an aggrieved retailer the Court will be well able to decide whether it was a genuine sale. Similarly, a supplier who thinks that he ought to withhold supplies will be perfectly capable of judging whether the sales were genuine.
      I think that there was some misunderstanding on the part of my hon. Friend the Member for St. Ives (Mr. G. R. Howard) that in future a dealer will be able to hold only something which is a genuine clearance sale or a seasonal sale. This is not so. People can have as many sales as they like all through the year. What we are dealing with is loss leadering in sales. People can go on having sales all the time, if they want to, and the consumer is not adversely affected, as some hon. Members opposite thought that he might be. So we are dealing only with the question of loss leadering.
      My hon. Friend the Member for St. Ives also said that in some sales the retailers buy up stocks, sometimes bankrupt stocks, and then sell them cheaply. As I said in my opening remarks, there is nothing whatever to prevent retailers from doing this. If they wish to buy a particular line at a cheap price and sell it in a sale, they are at liberty to do so. Indeed, it would be to the disadvantage of the consumer if they were not. What it prevents them doing is buying up a cheap line and then loss leadering it in the sale itself. That is what we have prevented in the Amendment. I will come later to the question of definition.
      Mr. Jay: Will the right hon. Gentleman clarify that point? If the retailer
      1106
      has some individual line of goods which he legitimately wishes to get rid of because they are not a successful line, can he sell those outright below the cost price and call it a clearance sale, even though the clearance relates to one particular line of goods and not to the other goods in stock?
      Mr. Heath: On this point he would not be selling them for the purpose of advertisement. This is part of the definition of loss leadering. He would be selling them, as some hon. Members have clearly described, because he has made a mistake in purchasing, has bought a line of which he cannot dispose and finds himself with this on his hands and for valid reasons wishes to dispose of it below cost. That is not loss leadering in the sense we are discussing it, which is selling goods for the purpose of advertising with the consequences which have been deduced from that and discussed by hon. Members.
      The right hon. Member for Battersea, North said that there were three doubts about the Bill which troubled him. The first was the question of the supplier who is involved in withholding supplies and that of the retailer who is aggrieved and who goes for redress. That supplier would have to prove that the man was selling not at a profit but for advertisement. The supplier in this case is really in the position of a defendant, because it is the aggrieved retailer who is bringing the case. The supplier must show that he had reasonable cause to believe that this was happening.
      I should have thought that that was within the capacity of a supplier, who could show what the retailer was doing by way of using the goods as an advertisement or a bait. The supplier, knowing the price at which he was supplying the retailer, could say that he was not selling the goods for a profit but for the purpose of advertisement. Thus he must show that he had reasonable cause to believe that that was being done. As I say, I should have thought that that was a reasonable position in which a supplier should be rut when a retailer is involved in this sort of case or when the Board of Trade takes up a case if it considers that it should.
      The second point of the right hon. Member for Battersea, North was

      1107
      whether this extended to a situation where the supplies were obtained from the supplier or another source. This matter was also raised by the hon. Member for Grimsby and my hon. Friend the Member for Stratford-on-Avon. The Amendment does extend to the other suppliers, but only for goods of the same or similar description. In other words, this would apply in particular, I think, to something like whisky. The withholding would apply not only to a particular brand of whisky but if one brand was used for loss leadering then this definition would include suppliers of other brands of whisky, who would be able to withhold supplies. However, they would not be able to do it as a collective arrangement because that would be covered by the Restrictive Practices Act, 1956.
      Mr. Jay: Surely that would enable all the manufacturers, if not collectively at any rate simultaneously, to withhold supplies from the same retailer?
      Mr. Heath: That is true, but they would not be able to do it by means of an organised agreement. [HON. MEMBERS: "Oh.") If they wished, they could withhold supplies of the same or similar description; and it seemed to us when drafting the Amendment— and the Committee has not yet discussed this in great detail—that it was much too narrow an approach to say that only that supplier could withhold that particular brand if it was being used for loss leadering, because loss leadering is used in general to deal with a particular type or description of article.
      Mr. J. T. Price: Does the right hon. Gentleman realise the implications of what he is saying—that as a matter of principle it would appear perfectly obvious to me that if proceedings were brought against a retailer by the Board of Trade for loss leadering it would be competent for that retailer to bring a counter-claim to the effect that he was the subject of a collective boycott and that that boycott was operating against him in breach of the 1956 Act? Apart from providing an extremely good wicket for the lawyers, does the right hon. Gentleman agree that that is the obvious deduction to make from his remarks?
      Mr. Heath: That situation cannot arise, because there is no question of bringing an action against a retailer for loss leadering; and the hon. Member has not had the benefit of being present during all our discussions on this topic this afternoon. The supplier is able to withhold supplies in the case of loss leadering under the definition in the Amendment. I am saying that another supplier of goods of the same or similar description could also withhold supplies in a case of loss leadering.
      Mr. Roy Jenkins: Since the basis of all this is that the manufacturer should be able to protect himself against his whole trading position being changed as a result of his product being used as a loss leader, why should other manufacturers be put in the position described by the right hon. Gentleman? Is that position not close to being a collective boycott? Will the right hon. Gentleman look at this matter again to see exactly what position is likely to be created?
      Mr. Heath: It is not a question of a collective boycott and if there were any question of a collective organisation arising that would come within the scope of the 1956 Act. It seems that if there is an attempt to loss leader in one brand of whisky, that will affect other brands. This was why we included the withholding of supplies as a definite act for goods of the same or similar description.
      Mr. Maude: Could this apply, for example, to all shirts, because it seems that this goes too wide and should be looked at afresh by my right hon. Friend?
      Mr. Heath: Goods of the same or similar description would, I think, include all shirts. I think that all shirts would be shirts and would, therefore, be of a similar description. It is difficult to give definitions of this sort off the cuff.
      Mr. William Wells: In what sense is the Secretary of State using the word "description" in this context? A great deal of controversy has centred around the word "description", particularly under the Sale of Goods Act, and it would be useful for the Committee to know what meaning

      1109
      the right hon. Gentleman attaches to it and whether he intends to define the word more precisely at a later stage.
      Mr. Heath: We have certain Amendments down for consideration later dealing with "similar kinds", "description" and so on, but perhaps it would be wise for me to remain in order and not comment on those Amendments until we reach them.
      Mr. Hale: Is the Secretary of State saying that because later Amendments appear on the Notice Paper it is not necessary for him to explain those amendments which are passed before that point is reached?
      Mr. Heath: I am saying that I am extending to the Committee the usual courtesy of trying to remain within the bounds of order. I have explained the position under the Amendment of the question of suppliers withholding supplies.
      I come to the third point made by the right hon. Member for Battersea, North. He asked whether the Amendment would exclude justifiable trading practices. I have dealt with some of those which were specifically before hon. Members and which affected the small shopkeeper. The right hon. Member said he thought that these practices would lead to goods being sold more cheaply and that, therefore, they should be supported. There are, however, various ways in which these practices can continue. I have pointed out that it the retailer has made a mistake in buying he can dispose of that line, provided he is not within the definition of selling for advertisement.
      8.30 p.m.
      Secondly, it is permissive on the manufacturer, as my hon. Friend the Member for Ormskirk (Sir D. Glover) said. The suppliers are in touch with the retailers and know when the position arises that they need not take action in particular cases. Thirdly, they can approach the manufacturer and ask permission to carry on a sale of a particular kind that would otherwise be loss leadering. Then there are the seasonal and the clearance sales. These are all ways in which the normal methods of giving to consumers the advantages of cheap selling can be maintained, so I hope that the right hon. Gentleman will feel that
      1110
      the anxieties he first expressed are, perhaps, not as serious as he thought from the point or view of maintaining for the consumer the advantages of cheaper selling which, after all, is what we are trying to obtain from this Bill.
      I think that those are the main points raised by the right hon. Gentleman and by my hon. Friends. The general reception of the Clause by the Committee has been, I think, that it is an improvement—or that this part of the Clause is an improvement—on the Clause as first drafted. The suggestion was made by the hon. Member for Stechford (Mr. Roy Jenkins), supported by his hon. Friend the Member for Grimsby, that we should have adopted, perhaps, American practice; in other words, a more administrative approach to this difficult question of loss leadering. On the other hand, in the general context of a Bill in which we are using a judicial procedure it is perhaps more in keeping to try to deal with this in the Bill itself. At the same time, no one has tried to disguise the difficulties of making it effective and flexible.
      When we consider flexibility we come to the point raised by the hon. and learned Member for Northampton (Mr. Paget) and the right hon. Member for Battersea, North about the meaning of "profit". This, as I said at the very beginning, is the attempt to be flexible in the matter as against the more rigid approach we had at first, and it is otherwise exemplified. In the Canadian legislation, to which we have looked as a model, the word "profit" is also used without definition as net or gross.
      What it means, as has been emphasised, is not selling at a loss but for the purpose of advertising, If one is to enter into a definition of what is net or gross profit one gets back to the position we faced with the more rigid wording we had to begin with. The point there fore is that we judge this upon the purpose of the retailer: was his purpose to make a profit?
      This is a matter of judgment that contains various elements, and also includes the question brought up by the hon. Member for Stechford as to how the retailer chooses to spread his overheads, which is the right of any retailer. Many hon. Members are interested in the maintenance of the rights of retailers,

      1111
      and that is one of the rights he must maintain. Had he the intention of making a profit, or was he doing it for the purpose of advertising? That seems to us to be the combination that has been used elsewhere, and can be used here, on which a judgment can be formed.
      Obviously, if he was not to make anything he would be selling for the purpose of making a loss. On the other hand, it may be that his calculations are wrong and that he sells at a loss without having that purpose. The definition therefore must be the two-sided one that his intention is to make a profit and that he has not the purpose of advertising. I believe that when we take those two together we do not have to go into the precise definitions which the hon. and learned Member for Northampton was so keen to have—
      Mr. J. J. Mendelson: On the point of definition, if the judgment is to be based on intention and purpose, a clear definition of what is meant by profit and whether it affects net profit is absolutely necessary, otherwise no such judgment could be made by anyone.
      Mr. Heath: With great respect to the hon. Gentleman I think that the reverse is the case; the supplier knows perfectly well the situation of retailers generally who are selling his goods, knows the different kinds of retailers, sizes of retailers, self-service, and so on, and I believe that he can judge whether the man's intention is to make a profit or whether his real purpose is not to make a profit but to advertise. That is the test on which we must judge—
      Mr. Paget: Does it not come back to the position that a manufacturer merely has to say, "I fixed this price as low as I could. Anybody who sells below this price is, in my view and in the light of my experience, not really trying to make a profit"?
      Mr. Heath: The supplier may say that, and he may use that as his own definition of loss leadering, and say, "I never withhold supplies except in those circumstances," but I would not be prepared to say that that is a definition all suppliers may use, because I do not believe that it is—
      Mr. Paget: The answer surely is that any supplier can take that definition. It means that it is open to any supplier to say that he is reasonably of opinion that a chap who sells his goods at below the recommended price is not trying to make a profit and that, therefore, he will not supply him in future.
      Mr. Heath: With respect, I do not believe that that follows at all. We are dealing specifically with the definition of loss leadering, and the man must be selling not for the purpose of making a profit, but for advertising, and those are the grounds on which the supplier can withhold supplies. If the supplier himself likes to accept that definition on his own account that is entirely up to him, but I am not saying for a moment that that is the definition which all suppliers have to accept.
      These are the main points that have emerged from the debate. The general view of the Committee is that this is a more effective way of dealing with this difficult problem than the version originally brought forward in the Bill. I hope that the Committee will accept it.
      Mr. Jay: I have no wish to prolong the debate but I think that the right hon. Gentleman's answers on the question of profit are extraordinary and quite unsatisfactory. We are not concerned whether or not it is the purpose of the retailer in some sense to make a profit, but unless we know in what sense he intended to make a profit the whole Amendment is meaningless. I confess that I assumed when I first addressed the Committee that as a matter of common sense it must mean that the retailer intended to make a net profit after providing for his own costs. That seemed a reasonable interpretation and I expected the right hon. Gentleman to say that that was what the Amendment meant as a matter of English or of drafting in which case, subject to a later Amendment, it would have been satisfactory.
      The right hon. Gentleman, however, does not give that assurance. If it does not mean net profit and if it means the gross margin which the retailer will earn we are back to the Clause in the Bill as first introduced. As the Bill was first introduced, a man was loss leading if he sold at or below the price which he had paid wholesale. If he bought at

      1113
      1s. and if he sold at 1s. or less than 1s. he was held to be loss leading. If the interpretation now is that we are dealing with gross profit it has only to be shown that he is selling at 1s. plus ½d. and he can argue that he is not loss leading. This brings us back to exactly the situation that we had under the original Clause.
      I assumed when the right hon. Gentleman introduced the Amendment that it was bona fide and meant something different from the original Clause 3, but if this is the interpretation, it is a hoax on the Committee. I am not saying that it is a deliberate hoax. It may be that the right hon. Gentleman did not understand either the original Clause or this amended proposal but, rightly understood, it is a hoax on the Committee. It takes us back exactly where we were before, after a great parade of improvements and amendments. If the right hon. Gentleman cannot do better than this, I advise my hon. and right hon. Friends to vote against the Amendment.
      Mr. Heath: I must tell the right hon. Member for Battersea, North with great respect, that he has completely misunderstood what I was saying. I said that there are two tests in this matter of loss leadering. The retailer must be shown to be doing this not for the purpose of making a profit but for the purpose of advertisement. In using the word "profit" I did not want to be drawn into any specific description of net profit or gross profit because these themselves are matters very much open to discussion as to what should be taken into gross profit or net profit on any particular retail sale.
      We tried in the first Clause to set out certain items and there was immediate discussion whether these were the items which should be taken into gross profit or not, but it is apparent that if the retailer does not make something over gross profit he will sell at a loss. Obviously, the supplier knows what the cost is to the retailer, and he knows that the retailer will have costs above that. He must form a judgment whether the retail sale is made not for the purpose of making a profit but for the purpose of advertisement. He can judge this without our trying in the Amendment to lay down a precise defi-
      1114
      nition—this is all I am saying—of what is net profit and what is gross profit. If he withholds supplies and the retailer is aggrieved and takes the matter to the Court, the Court must decide whether the man was setting out with the intention of selling not for the purpose of making a profit, allowing for the different factors involved, but for the purpose of advertisement.
      That is a decision which the Court must take, and I believe that the Court is in a position to take it without our putting a precise definition into the Bill of all the things which ought to go into net profit or gross profit. That is all I am saying. I think that the right hon. Gentleman has completely misunderstood in saying that this is some bogus form of provision. It is not in the least. The manufacturer, looking at the situation, will decide whether a man is selling for a profit or for this other reason, and then, if his opinion is challenged, the matter must be decided by the Court.
      Mr. Jay: I do not want to turn the debate into an altercation between the Front Benches, but we really must know where we are. It is true that, under the Amendment, there are two issues, first, whether the retailer is seeking advertisement, and second, whether he is seeking a profit. But the fact that the advertisement issue Irises does not alter the need at the same time to know what is meant by seeking a profit. The right hon. Gentleman now appears to be arguing that he really does mean net profit because he says that, if a retailer is making a loss, then the case would be established.
      Mr. Cole rose—
      Mr. Jay: May I finish?
      He appears there to mean a net loss and he therefore implies that what he means in the Bill is a net profit. If he were to say that quite clearly, I think that we should be satisfied. He says that the Court has to decide, but, of course, the Court must know what it has to decide on. Otherwise, how can it reach a meaningful decision? If the right hon. Gentleman has said simply and plainly that, evidently, the Bill ought to mean and does mean net profit, we should be satisfied, but he has not said that. I think that he has confused

      1115
      us further and, far those reasons, we remain unsatisfied.
      Mr. Cole: The right hon. Member for Battersea, North (Mr. Jay) did not return the courtesy which I extended to him, but I make no complaint about that.
      I must point out to the right hon. Gentleman and his hon. Friends that the word "seek" does not appear in the Amendment. The point of the Amendment may well be met even though a man is making a profit, provided also that he is doing it from the point of view of advertisement. The reference in the Amendment is to the purpose not only of not making a profit, but
      "of attracting to the establishment…customers likely to purchase other goods…"
      This is the ruling factor in loss leadering. Loss leadering does not mean that a man must sustain a loss. By the right hon. Gentleman's own interpretation of Clause 3 as it stood, goods could have been sold at the price at which they were bought, which would mean neither loss nor profit.
      I ask right hon. and hon. Members opposite to address their minds to the crux of the Amendment, which is that a man sells, at whatever price, for the purpose of attracting people to the premises to purchase other goods or otherwise for the purpose of advertising his business. The question of profit is a secondary matter, and the two issues will exist side by side.
      Mrs. Corbet: I have explained on other occasions my opposition to the principle of the Bill, but I must say that I am favourably impressed by this Amendment. I feel that we shall save something from the dangers which menace certain sections of the community.
      I quite understand what the right hon. Gentleman means when he says that it is not really possible to put into the Bill a detailed indication of what net profit is. At any one moment, it is very difficult to say whether an article or series of articles sold in a shop will secure a profit for the shopkeeper on the total working of his shop. For instance, the price of electricity may go up in the course of a year. Overheads may increase. The cost of the labour employed in the business may rise. It
      1116
      is clear that a shopkeeper cannot estimate the net profit that he has managed to make except over at least a year's working. That makes it extremely difficult to put into the Bill the words "net profit".
      8.45 p.m.
      I take it that when the retailer brings the supplier before the Court because the supplier has failed to deliver goods to him the supplier then has to make good his case for not having supplied the goods. He will not run the risk of losing his action without ensuring that he has failed to supply the goods for good and legal reasons. He must, therefore, make sure that the reason why he did not supply the goods was that he was fairly certain that the dealer had sold the goods at a very low price for the main purpose of advertising.
      Suppose that a retailer buys several thousand articles which he proposes to sell at a profit of a halfpenny on each. Although with a profit of a halfpenny—
      The Temporary Chairman (Sir Samuel Storey): Order. The hon. and learned Member for Walsall, North (Mr. W. Wells must not keep passing between the hon. Lady the Member for Peckham (Mrs. Corbet) and the Chair.
      Mrs. Corbet: Several thousand halfpennies will not amount to a sufficient profit for the Court to say that this was the retailer's purpose. We must leave it to the Court to decide what were the retailer's motives and I think that we must leave it to the supplier who proposes to take this very drastic action to ensure that he withholds his goods only on legal grounds. I suggest to my hon. Friends that they might think again and, perhaps, decide not to oppose the Amendment.
      Mr. Hale: First, I wish to apologise to my hon. and learned Friend the Member for Walsall, North (Mr. W. Wells), who came across, in courtesy to me, to discuss a matter of immediate relevance on which a decision had to be taken.
      Secondly, I wish to seek your guidance, Sir Samuel. Your predecessor in the Chair, 12 or 14 hours ago, at a rough estimate, said that he would call two Amendments in my name and the names

      1117
      of my hon. Friends the Members for Ebbw Vale (Mr. M. Foot) and Nelson and Colne (Mr. S. Silverman) to this Amendment. He also said that it would be convenient to the Committee if we discussed new Clause No. 6 entitled "Loss leading", to which somewhat limited attention has been paid, at the same time as we discussed this Amendment, although presumably the Question would have to be put later in the evening when we reached the new Clauses—if we make so much progress today. He then announced that the Question on a number of other Amendments to this Amendment would be put.
      I find myself in some difficulty, and I think that my hon. Friends have some doubts, although they can express themselves with more competence than I could do, about whether it is appropriate for me to rise to move my Amendment now, or whether you, Sir Samuel, would think it more appropriate to put the
      Question and let the Committee decide whether these words should be provisionally added before we discussed the whole series of Amendments, which would be more convenient. I do not want to lose the opportunity of discussing my Amendments, and I am only too happy to ascertain the wishes of the Committee.
      The Temporary Chairman: The position is quite clear. All the Amendments to the Amendment are to the second Question. Therefore, it is necessary for us to dispose of the first Question on the present Amendment and to propose the second Question on that Amendment, and then I will call the hon. Member to move his Amendment.
      Question put, That the words proposed to be left out stand part of the Clause:—
      The Committee divided: Ayes 196, Noes 256.

      Division No. 61.]

      AYES

      [8.50 p.m.

      Abse, Leo

      Edelman, Maurice

      Jay, Rt. Hon. Douglas

      Ainsley, William

      Edwards, Rt. Hon. Ness (Caerphilly)

      Jenkins, Roy (Stechford)

      Albu, Austen

      Edwards, Robert (Bilston)

      Jones, Dan (Burnley)

      Allaun, Frank (Salford, E.)

      Edwards, Walter (Stepney)

      Jones, Elwyn (West Ham, S.)

      Awbery, Stan (Bristol, Central)

      Evans, Albert

      Kelley, Richard

      Bacon, Miss Alice

      Fernyhough, E.

      Kenyon, Clifford

      Barnett, Guy

      Finch, Harold

      Lawson, George

      Baxter, William (Stirlingshire, W.)

      Fitch, Alan

      Lee, Frederick (Newton)

      Beaney, Alan

      Fletcher, Eric

      Lee, Miss Jennie (Cannock)

      Bellenger Rt. Hon. F. J.

      Foot, Dingle (Ipswich)

      Lever, L. M. (Ardwick)

      Bence, Cyril

      Foot, Michael (Ebbw Vale)

      Lewis, Arthur (West Ham, N.)

      Bennett, J. (Glasgow, Bridgeton)

      Forman, J. C.

      Lipton, Marcus

      Benson, Sir George

      Fraser, Thomas (Hamilton)

      Loughlin, Charles

      Blackburn, F.

      Galpern, Sir Myer

      Lubbock, Eric

      Blyton, William

      George, Lady Megan Lloyd (Crmrthn)

      Mabon, Dr. J. Dickson

      Boardman, H.

      Ginsburg, David

      McBride, N.

      Bottomley, Rt. Hon. A. G.

      Gordon Walker, Rt. Hon. P. C.

      MacColl, James

      Bowden, Rt. Hn. H. W.(Leics, S.W.)

      Gourley, Harry

      MacDermot, Niall

      Bowles, Frank

      Grey, Charles

      McInnes, James

      Braddock, Mrs. E. M.

      Griffiths, David (Rother Valley)

      McLeavy, Frank

      Bradley, Tom

      Griffiths, Rt. Hon. James (Llanelly)

      Mallalieu, E. L. (Brigg)

      Brockway, A. Fenner

      Griffiths, W. (Exchange)

      Manuel, Archie

      Broughton, Dr. A. D. D.

      Grimond, Rt. Hon. J.

      Mapp, Charles

      Butler, Herbert (Hackney, C.)

      Gunter, Ray

      Marsh, Richard

      Callaghan, James

      Hale, Leslie (Oldham, W.)

      Mason, Roy

      Carmichael, Neil

      Hamilton, William (West Fife)

      Mendelson, J. J.

      Castle, Mrs. Barbara

      Hannan, William

      Millan Bruce

      Chapman, Donald

      Harper, Joseph

      Milne, Edward

      Cliffe, Michael

      Hart, Mrs. Judith

      Mitchison, G. R.

      Collick, Percy

      Hayman, F. H.

      Monslow, Walter

      Craddock, George (Bradford, S.)

      Healey, Denis

      Moody, A. S.

      Crosland, Anthony

      Henderson, Rt. Hn. Arthur (Rwly Regis)

      Morris, Charles (Openshaw)

      Crossman, R. H. S.

      Herbison, Miss Margaret

      Moyle, Arthur

      Cullen, Mrs. Alice

      Hill, J. (Midlothian)

      Mulley, Frederick

      Dalyell, Tam

      Holman, Percy

      Neal, Harold

      Darling, George

      Holt, Arthur

      Oliver, G. H.

      Davies, G. Elfed (Rhondda, E.)

      Houghton, Douglas

      O'Malley, B. K.

      Davies, Ifor (Gower)

      Howell, Denis (Small Heath)

      Oram, A. E.

      Davies, S. O. (Merthyr)

      Howie, W.

      Oswald, Thomas

      Delargy, Hugh

      Hoy, James H.

      Padley, W. E.

      Dempsey, James

      Hughes, Cledwyn (Anglesey)

      Paget, R. T.

      Dodds, Norman

      Hughes, Emrys (S. Ayrshire)

      Pannell, Charles (Leeds, W.)

      Doig, Peter

      Hughes, Hector (Aberdeen, N.)

      Parker, John

      Donnelly, Desmond

      Hunter, A. E.

      Paton, John

      Driberg, Tom

      Irvine, A. J. (Edge Hill)

      Pavitt, Laurence

      Duffy, A. E. P. (Colne Valley)

      Irving, Sydney (Dartford)

      Pearson, Arthur (Pontypridd)

      Ede, Rt. Hon. C.

      Janner, Sir Barnett

      Peart, Frederick

      Pentland, Norman

      Skeffington, Arthur

      Wade, Donald

      Prentice, R. E.

      Slater, Mrs. Harriet (Stoke, N.)

      Wainwright, Edwin

      Price, J. T. (Westhoughton)

      Slater, Joseph (Sedgefield)

      Warbey, William

      Probert, Arthur

      Small, William

      Watkins, Tudor

      Pursey, Cmdr. Harry

      Smith, Ellis (Stoke, S.)

      Wells, William (Walsall, N.)

      Randall, Harry

      Snow, Julian

      White, Mrs. Eirene

      Rankin, John

      Sorensen, R. W.

      Whitlock, William

      Redhead, E. C.

      Spriggs, Leslie

      Wilkins, W. A.

      Rees, Merlyn (Leeds, S.)

      Steele, Thomas

      Willey, Frederick

      Rhodes, H.

      Stones, William

      Williams, W. T. (Warrington)

      Roberts, Albert (Normanton)

      Strauss, Rt. Hn. G. R. (Vauxhall)

      Wilson, Rt. Hon. Harold (Huyton)

      Robertson, John (Palsley)

      Stross, Sir Barnett (Stoke-on-Trent, G.)

      Winterbottom, R. E.

      Robinson, Kenneth (St. Panoras, N.)

      Swain, Thomas

      Woof, Robert

      Rodgers, W. T. (Stockton)

      Swingler, Stephen

      Wyatt, Woodrow

      Rogers, G. H. R. (Kensington, N.)

      Symonds, J. B.

      Yates, Victor (Ladywood)

      Ross, William

      Taylor, Bernard (Mansfield)

      Shinwell, Rt. Hon. E.

      Thomas, George (Cardiff, W.)

      TELLERS FOR THE AYES:

      Short, Edward

      Thomas, Iorwerth (Rhondda, W.)

      Mr. Charles A. Howell and

      Silverman, Julius (Aston)

      Thompson, Dr. Alan (Dunfermline)

      Mr. McCann.

      Silverman, Sydney (Nelson)

      Thornton, Ernest

      NOES

      Agnew, Sir Peter

      Duncan, Sir James

      Johnson, Eric (Blackley)

      Allason, James

      Eden, Sir John

      Johnson Smith, Geoffrey

      Amery, Rt. Hon. Julian

      Elliot, Capt. Walter (Carshalton)

      Jones, Arthur (Northants, S.)

      Arbuthnot, Sir John

      Elliott, R.W. (Newc'tle-upon-Tyne, N.)

      Joseph, Rt. Hon. Sir Keith

      Atkins, Humphrey

      Emmet, Hon. Mrs. Evelyn

      Kaberry, Sir Donald

      Awdry, Daniel (Chippenham)

      Erroll, Rt. Hon. F. J.

      Kerans, Cdr. J. S.

      Balniel, Lord

      Farey-Jones, F. W.

      Kerr, Sir Hamilton

      Barber, Rt. Hon. Anthony

      Fell, Anthony

      Kershaw, Anthony

      Barlow, Sir John

      Finlay, Graeme

      Kirk, Peter

      Barter, John

      Fisher, Nigel

      Kitson, Timothy

      Batsford, Brian

      Fletcher-Cooke, Charles

      Lancaster, Col. C. G.

      Beamish, Col. Sir Tufton

      Fraser, Rt. Hn. Hugh (Stafford & Stone)

      Leather, Sir Edwin

      Bevins, Rt. Hon. Reginald

      Freeth, Denzil

      Leavey, J. A.

      Biffen, John

      Galbraith, Hon. T. G. D.

      Legge-Bourke, Sir Harry

      Bingham, R. M.

      Germans, Lady

      Lewis, Kenneth (Rutland)

      Birch, Rt. Hon. Nigel

      Gibson-Watt, David

      Lindsay, Sir Martin

      Bishop, Sir Patrick

      Gilmour, Ian (Norfolk, Central)

      Linstead, Sir Hugh

      Black, Sir Cyril

      Gilmour, Sir John (East Fife)

      Litchfield, Capt. John

      Box, Donald

      Glover, Sir Douglas

      Lloyd, Rt. Hon. Selwyn (Wirral)

      Boyd-Carpenter, Rt. Hon. John

      Glyn, Dr. Alan (Clapham)

      Longbottom, Charles

      Boyle, Rt. Hon. Sir Edward

      Godber, Rt. Hon. J. B.

      Longden, Gilbert

      Braine, Bernard

      Goodhart, Philip

      Loveys, Walter H.

      Brewis, John

      Goodhew, Victor

      Lucas-Tooth, Sir Hugh

      Bromley-Davenport, Lt. -Col. Sir Walter

      Gough, Frederick

      McAdden, Sir Stephen

      Brown, Alan (Tottenham)

      Gower, Raymond

      MacArthur, Ian

      Bryan, Paul

      Grant-Ferris, R.

      McLaren, Martin

      Buck, Antony

      Green, Alan

      Maclean, Sir Fitzroy (Bute & N. Ayrs)

      Bullard, Denys

      Gresham Cooke, R.

      McLean, Neil (Inverness)

      Bullus, Wing Commander Eric

      Grosvenor, Lord Robert

      McMaster, Stanley R.

      Burden, F. A.

      Gurden, Harold

      Macmillan, Maurice (Halifax)

      Campbell, Gordon

      Hamilton, Michael (Wellingborough)

      Madden, Martin

      Carr, Rt. Hon. Robert (Mitcham)

      Harris, Reader (Heston)

      Maginnis, John E.

      Cary, Sir Robert

      Harrison, Col. Sir Harwood (Eye)

      Maitland, Sir John

      Channon, H. P. C.

      Harvey, Sir Arthur Vera (Macclesf'd)

      Markham, Major Sir Frank

      Chataway, Christopher

      Harvey, John (Walthamstow, E.)

      Marples, Rt. Hon. Ernest

      Chichester-Clark, R.

      Harvie Anderson, Miss

      Marshall, Sir Douglas

      Clark, Henry (Antrim, N.)

      Hastings, Stephen

      Marten, Neil

      Clark, William (Nottingham, S.)

      Hay, John

      Mathew, Robert (Honiton)

      Cleaver, Leonard

      Heaid, Rt. Hon. Sir Lionel

      Matthews, Gordon (Meriden)

      Cole, Norman

      Heath, Rt. Hon. Edward

      Maude, Angus (Stratford-on-Avon)

      Cooke, Robert

      Henderson, John (Cathcart)

      Maudling, Rt. Hon. Reginald

      Cooper, A. E.

      Hendry, Forbes

      Mawby, Ray

      Cooper-Key, Sir Neill

      Hiley, Joseph

      Maxwell-Hyslop, R. J.

      Corfield, F. V.

      Hill, Mrs. Eveline (Wythenshawe)

      Maydon, Lt.- Cmdr. S. L. C.

      Costain, A. P.

      Hill, J. E. B. (S. Norfolk)

      Mills, Stratton

      Coulson, Michael

      Hirst, Geoffrey

      Miscampbell, Norman

      Courtney, Cdr. Anthony

      Hobson, Rt. Hon. Sir John

      Montgomery, Fergus

      Craddock, Sir Beresford (Spelthorne)

      Hocking, Philip N.

      Morgan, William

      Crltchley, Julian

      Hogg, Rt. Hon. Quinton

      Neave, Airey

      Crowder, F. P.

      Holland, Philip

      Nicholls, Sir Harmar

      Cunningham, Sir Knox

      Hollingworth, John

      Noble, Rt. Hon. Michael

      Curran, Charles

      Hornby, R. P.

      Nugent, Rt. Hon. Sir Richard

      Currie, G. B. H.

      Howard, Hon. G. R. (St. Ives)

      Oakshott, Sir Hendrie

      Dalkeith, Earl of

      Hughes Hallett, Vice-Admiral John

      Orr-Ewing, Sir Ian (Hendon, North)

      Dance, James

      Hughes-Young, Michael

      Page, John (Harrow, West)

      d' Avigdor-Goldsmid, Sir Henry

      Hulbert, Sir Norman

      Page, Graham (Crosby)

      Deedes, Rt. Hon. W. F.

      Hurd, Sir Anthony

      Panneil, Norman (Kirkdale)

      Digby, Simon Wingfield

      Hutchison, Michael Clark

      Pearson, Frank (Clitheroe)

      Donaldson, Cmdr. C. E. M.

      Irvine, Bryant Godman (Rye)

      Peel, John

      Drayson, G. B.

      James, David

      Percival, Ian

      du Cann, Edward

      Johnson, Dr. Donald (Carlisle)

      Peyton, John

      Pickthorn, Sir Kenneth

      Russell, Sir Ronald

      Tilney, John (Wavertree)

      Pike, Miss Mervyn

      Scott-Hopkins, James

      Touche, Rt. Han. Sir Gordon

      Pitman, Sir James

      Seymour, Leslie

      Turton, Rt. Hon. R. H.

      Pitt, Dame Edith

      Sharples, Richard

      Tweedsmuir, Lady

      Pounder, Rafton

      Shaw, M.

      van Straubenzee, W. R.

      Powell, Rt. Hon. J. Enoch

      Shepherd, William

      Vane, W. M. F.

      Price, David (Eastleigh)

      Skeet, T. H. H.

      Vickers, Miss Joan

      Price, H. A. (Lewisham, W.)

      Smith, Dudley (Br'ntf'd & Chiswick)

      Walker-Smith, Rt. Hon. Sir Derek

      Prior, J. M. L.

      Smyth, Rt. Hon. Brig. Sir John

      Ward, Dame Irene

      Prior-Palmer, Brig. Sir Otho

      Spearman, Sir Alexander

      Watkinson, Rt. Hon. Harold

      Proudfoot, Wilfred

      Stainton, Keith

      Webster, David

      Pym, Francis

      Stanley, Hon. Richard

      Wells, John (Maidstone)

      Quennell, Miss J. M.

      Stevens, Geoffrey

      Whitelaw, William

      Ramsden, Rt. Hon. James

      Stodart, J. A.

      Williams, Dudley (Exeter)

      Rawlinson, Rt. Hon. Sir Peter

      Stoddart-Scott, Col, Sir Malcolm

      Williams, Paul (Sunderland, S.)

      Redmayne, Rt. Hon. Martin

      Summers, Sir Spencer

      Wills, Sir Gerald (Bridgwater)

      Rees, Hugh (Swansea, W.)

      Taylor, Sir Charles (Eastbourne)

      Wilson, Geoffrey (Truro)

      Renton, Rt. Hon. David

      Taylor, Frank (M'ch'st'r, Moss Side)

      Wise, A. R.

      Ridley, Hon. Nicholas

      Thatcher, Mrs. Margaret

      Wolrige-Gordon, Patrick

      Ridsdale, Julian

      Thomas, Sir Leslie (Canterbury)

      Woodhouse, C. M.

      Rippon, Rt. Hon. Geoffrey

      Thomas, Peter (Conway)

      Woodnutt, Mark

      Robertson, Sir D.(C'thn's & S'th'ld)

      Thompson, Sir Richard (Croydon, S.)

      Worsley, Marcus

      Roots, William

      Thorneycroft, Rt. Hon, Peter

      Yates, William (The Wrekin)

      Ropner, Col. Sir Leonard

      Thornton-Kernsley, Sir Colin

      Royle, Anthony (Richmond, Surrey)

      Tiley, Arthur (Bradford, W.)

      TELLERS FOR THE NOES:

      Mr. Ian Fraser and Mr. Jasper More.

      Question proposed, That the proposed words be there added.
      The Temporary Chairman (Sir Samuel Storey): In calling the hon. Member for Oldham, West (Mr. Hale) to move his first Amendment to the Amendment, I suggest that we should discuss his second one at the same time.
      Mr. Hale: Sir Samuel, I happily accept that suggestion to make a small Amendment but ask that I may discuss them consecutively and continuously rather than at the same or similar time as the original Amendment.
      I beg to move, as an Amendment to the proposed Amendment, in line 2, to leave out "or a similar".
      I was interrupted this morning when I was painting a portrait of my grandmother—which, in view of the regrettable fact that she has been dead for half a century I regarded as an increasingly urgent task—and invited urgently to visit the crow's nest of the new Ministry of Health. This involved me in a twenty minutes' circular tour round the catacombs of the Elephant and Castle before I surfaced. I am bound to admit that I was not nearly so lost this morning as I am at this moment, having had the advantage of the continuous advice of hon. Gentlemen opposite.
      We expect some confusion from the right hon. Gentleman when confusion is necessary. I am not suggesting that he could not be more clear about the implications of the Clause if he were more certain of its utility and its effective-
      1122
      ness, and, indeed, if he had more confidence in the Bill after the buffeting that it has had.
      We have had several explanations of the Clause, but no explanation of the important and detailed expressions in it. One almost joyful explanation that came from hon. Gentlemen opposite was that almost every High Court judge would know what a clearance sale was. I have the greatest respect for our judiciary, but I would have thought that they know less about clearance sales than does Mrs. Jones, of Oldham. I think that the House ought to know what a clearance sale is when it is being used as a term of art in the Amendment.
      The right hon. Gentleman was asked what was the meaning of profit He did not know. Not in the abstract, but in the terms of this Measure under which people are liable to be ruined. He said that one cannot lay down a definition. How will the retailer, or the small wholesaler, know when he is going to break the law and when he is not if the right hon. Gentleman cannot tell us what it means? How will they ever know?
      My hon. and learned Friend the Member for Northampton (Mr. Paget), who raised the question in a very able speech, did not fully develop the important point that he made so effectively with brevity. In many oh these articles one is dealing with a reduced stock of a fairly large purchase. A shopkeeper buys 1,000 articles and disposes of 600, and then he wants to get rid of what is left, either by an annual clearance sale, or by a seasonal sale.

      1123
      The right hon. Gentleman did not say what seasonal meant, but it is important. In his more forthcoming moments he gave a suggested definition. He said that the sale of diaries and Christmas cards at Christmas time was seasonal. That is a fair point. I had thought that seasonal was different. I had thought that it may be something like summer, autumn, winter, and regular disposal.
      Mr. R. H. Turton: On a point of order. Sir Samuel, can you explain which Amendment you have called? Is it the first, second, or third Amendment to the Government Amendment?
      The Temporary Chairman: I have called the first Amendment to the Government Amendment, and the following one is being discussed with it.
      Mr. Hale: I am glad that the light is spreading. The hon. Member now knows a little more than he did a few seconds ago. If I go on long enough I may be able to spread the light a little more.
      The right hon. Gentleman's definition of "seasonal" is in the terms of Halley's Comet, which comes round every 74 years, at regular intervals. I have a different idea. I do not want to be facetious, although it is tempting to be so. But some explanations have been so surprising that we are in difficulties. Every time I thought that I was getting out of my difficulties, the hon. Member for Tiverton (Mr. Maxwell-Hyslop) intervened. He is about as full of accurate information as a coconut is of pasteurised milk. Out of the earnestness of his desire to contribute to the debate, and his undiverse and not very accurate knowledge, he managed to make the limited confusion worse confounded.
      We are dealing with the question of the definition of "seasonal". [HON. MEMBERS: "We are not."] Yes. I am putting the case to the Committee under the direction of the Chair, which I always treat with the great courtesy that it deserves. I am putting to the Committee the reason why we should exclude a wide variety of goods from this extremely wide definition.
      The hon. Member for Gillingham (Mr. Burden) popped up, anxious to oblige every time. The hon. Member for
      1124
      Twickenham (Mr. Gresham Cooke) and the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) also intervened, and demonstrated the fact that too many cooks spoil the political broth. I have listened to all the things that they have said. There is no more innocent man in the House than I. I looked upon winter overcoats as being seasonal. I thought that there was a time of year when winter overcoats became unseasonal, and that when that time came there was a case for disposing of them cheaply.
      I thought that a loss leader was something rather special—something that might well be referred to in one of the famous speeches of the right hon. Member for Flint, West (Mr. Birch), or something of that kind, but if packets of sugar can be loss leaders, presumably winter overcoats can also, if they are sold in the early summer. I do not want to be indelicate, but I usually find, towards the end of May or the beginning of June, signs that corsets have become non-seasonal, and I presume that it would then be the desire of the retailers of corsets and brassieres to sell them at reasonable prices.
      The Temporary Chairman: I must ask hon. Members not to pass between the hon. Member who has the Floor and the Chair. I hope that hon. Members will stop doing this.
      Mr. Hale: I am much obliged, Sir Samuel. I thought that it was a slight shadow.
      I spoke of the very great difficulty of defining the word "retailing" in a previous intervention. My hon. Friend the Member for Dundee, West (Mr. Doig), in a very able and moving speech, which was very effective, referred to these problems.
      I return to the question of brassieres. I recall an occasion, many years ago, when one of my friends invited me to lunch at a "brassiere", as he called it. I said, "We will have a poulet en camisole". But that is irrelevant to the point that I am putting.
      We are entitled to know what "seasonal" means. Whether we seem facetious or not, we are also entitled to know what a clearance sale means. The hon. Member for Gillingham, in one of his more forthright and understand-

      1125
      able moments, said "You chaps do not know anything about retailing, or market research". I have been a director of a market research company for 12 years. It has been fairly prosperous, and has had an increasing turnover. I have not benefited, because I do not accept any director's fees. That is the only difference in respect of my knowledge and experience of the subject.
      The hon. Member said, "You do not understand this. You must wait 12 months to find out what the costs are." If the retailer must wait 12 months to find what are the costs, a wholesaler must wait more than 12 months to find whether he has contravened what the costs are. He cannot take action under the Clause, because the information is not available.
      Mr. Burden: I said that firms have to wait until their accounts are audited to find whether they have made a profit on their business during the year.
      Mr. Hale: We were not talking about a profit on their gross turnover. This was the point of the question to the Secretary of State which he rather dodged. We asked what he was referring to in terms of profit.
      I understood the right hon. Gentleman to go as far as this. He said that we were talking about the profit on the article in question and not, as the hon. Member suggested, the profit on the articles which were not in question. We got as far as that. When we asked the right hon. Gentleman whether he meant net or gross profit and we got as far as asking whether he meant the net or gross profit on the number of articles which a retailer was disposing of as loss leaders, or alleged loss leaders out of a much larger number which he may have bought and passed through his accounts and on which he had already made a profit, we got no information.
      The first Amendment in the names of myself and of my hon. Friends—[HON. MEMBERS: "Hear, hear."] There is a great deal to be said for festina lente in legislation. Think of the tragic mistakes which have been made in the last 12 years in legislation which the Government had to pass amending Acts to put right. Let us on this occasion consider the matter just a little bit before we go further.
      1126
      We have suggested leaving out "or a similar". The Secretary of State is not at his best today. He could be more specific and forthcoming if he wished. No one has more respect for his ability than I haw, in the appropriate place, but it is not quite as evident today. The right hon. Gentleman said that one whisky was the same as another. That is a point of view which would not be accepted by a number of persons with whom I have been associated. Suppose, however, that that is the test. Is one alcoholic drink the same as another? If "the same or a similar applies to whisky, does it apply to wine?
      No one should say that there is not resale price maintenance of wine. There is strong r.p m. of wine. It certainly has been broker by some intelligent competition. Gilbey's sales of wines, I understand, are price-maintained and strictly so. Whether or not it is enforced, that is the position of retail sales.
      Is a Mouton Rothschild 1947 the same as Minister of Defence 1963, or is it not? We are entitled to know. I beg the Committee to believe that I am fighting against the Temptation to indulge in any argument which might be too far-fetched or facetious.
      Let us take the simple subject about which we are speaking. We are talking largely about soap. Indeed, a good deal of the discussion has been saponaceous. When a Lord Chancellor, from the Woolsack, used that term in relation to a bishop known to the House of Lords as "Soapy Sam", he was called to order—although one cannot call a Lord Chancellor to order; there is no one to do it. He was rebuked by some of his distinguished confreres. So I will not pursue that.
      Soap is an area of competition in which a great deal of r.p.m. can turn. Is one soap similar to another? This is a difficult. painful and almost tactless question. The average hon. Member may think that one simply has soap that washes, soap that washes white, soap that washes whiter and soap that washes so white that Mrs. Jones, in Coronation Street, can identify it from a distance of 100 yards, and identify its category.
      9.15 p.m.
      There are many sorts of soap. There are many types of soap, and very often

      1127
      they serve considerably different purposes. I have not gone into this matter in great detail, but I have glanced at the Encyclopaedia Britannica and find zinc soap, real soap and framed soap, floais soap, and milled soap, usually from the grocers which permits the infitration of perfume, granulated soap and textile soap. Textile soaps are used in large quantities in the woollen industry. That is an industry which would buy soap from a large retailer, perhaps at cut prices in large quantities. Anyone who knows the West Riding knows that that is not an unusual proposition.
      There are shaving creams which are very different and are mostly made of tallow and coconut oil. There are metallic soaps of alkaline earth and heavy metal and there is soft soap. The list is extended to all sorts of derivatives such as hair-cream, and of course there are detergents. I do not want to take unnecessary time, but the detergents are divided into anionic, cationic, and nonionic. This is the long molecule chain. When dissolved in water it becomes negative ion or anion. The best known types are R.O.S.O3N.A. and sodium alkyl-sulphate, R.C6 H4S.O4N.A., or sodium alkyl benzene sulphonates. It is not enough to say that R. means hydrocarbon chain with not less than 8 and not more than 18 molecules alone.
      Cationic is a common example of where the chain part of the molecule is the positive ion, C18H37NH3CL. It would be physically impossible to say that there is a similarity except in the sense of use. The non-ionic is for a different purpose, washing machines. That reminds me of Mr. Bloom. We must not forget Mr. Bloom.
      Who is to decide? If we are to say that a High Court judge will know what "seasonal" means and what a "clearance sale" is and whether one soap is like another "or similar" it is all very well. The trouble about Mr. Bloom is that the Act is not effective. One never knows whether the Tory Government blunder into these things by mistake or from an excess of cunning, and whether this was put forward as a blanket. All the very good practices in relation to cut price selling can be borne by the manufacturers or large wholesalers without let or hindrance from the Clause as
      1128
      originally drafted or as it is now drafted. It does not affect them at all.
      The right hon. Gentleman has gone further. He says, "We are going to say, 'If you don't know what you can do and don't know what you can't do you write and ask the manufacturer. If he says you can do it, you are all right' ". That is exactly what the Clause says, and I am not misrepresenting it by one iota. If one gets the manufacturer's permission, one can do what one likes—sell at what price one likes, at a net loss or a gross loss. The manufacturer, who usually has retail interests, can give his own shops permission to run loss leaders every week of their lives. The manufacturer is too big to interfere with. If he has a nephew in retail, or more appropriately a niece, he can say, "It is reasonable for you to sell at any price and to wipe out your competitors, who are not related to me". That is the precise meaning of the Clause.
      But the right hon. Gentleman adds some qualifications—and here I anticipate the Chair, because I am coming to the second Amendment in my name. The right hon. Gentleman says, "You need not establish that the contract with you has been broken. You need not establish that he is conducting sales of loss leaders and that these sales are on goods supplied by Mr. Jones. Mr. Brown can pop in and say, 'You are a loss leader seller and I shall stop you and your suppliers' ". The right hon. Gentleman has not thought of the very serious problem which has not yet been postulated. If Mr. Jones and his manufacturer arranged permission to sell but Mr. Brown said, "In my view this is a loss leader, whether you wangle the permission or not," can Mr. Brown refuse to supply?
      The right hon. Gentleman constantly suggested that the cumulative effect of the Clause, with the Amendment accepted by the Committee, subject to the present discussions, is that one can stop only within 12 months. Suppose that a retailer changes his wholesaler. This is a complication of the question which I ought to put clearly first: what happens when something becomes out of date? Suppose that a retailer has been provided with a product, backed by an immense amount of advertising material and guaranteed, but that it proves wholly unsuccessful. The retailer says, "I shall

      1129
      deal no longer with this man. This was poor stuff and I have to dispose of it". But how can he dispose of it? The retailer can do it only on a number of grounds. The first is seasonal grounds, and these do not apply in this case, unless the right hon. Gentleman intends to say that "seasonal" means "getting a bit old". The second ground is that it is a clearance sale—and he cannot have a successful clearance sale of one unsuccessful item. In order to sell the one item in a clearance sale he would presumably have to dispose of a mass of other goods in stock. Alternatively, he can get written permission from the manufacturer who supplied the goods, with whom he has quarrelled, having taken his order somewhere else. This is all nonsense.
      Mr. Heath: I do not think the hon. Gentleman heard the explanation I gave at the end of the last debate, which was that he can dispose of those goods because he is selling them because he has them on hand or has bought them by mistake or misjudgment and he is not using them
      "for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods or otherwise for the purpose of advertising the business of the dealer".
      Mr. Hale: I heard that.
      Mr. Heath: The hon. Gentleman might have acknowledged it. The dealer is disposing of one line of stock which he does not want to hold. Therefore, he can do it.
      Mr. Hale: I heard that one. If a dealer has got landed with 1,000 rusty razors, he can sell them to an art dealer and he can lump them in with a couple of Renoirs, a Monet, a Manet and a Picasso. He can dispose of them in that way and he has not broken the law. Or he could send them to a local autioneer and tell him to chuck them in with the next small mansion he disposes of. That is all right. However, it must not be done between one dealer and another dealer, according to one of the Amendments we have passed today.
      My hon. and learned Friend the Member for Northampton (Mr. Paget) mentioned, among the many other points he made, a question which I do not think he followed up. Perhaps he was satisfied by some of the interventions.
      1130
      He asked this: if Clauses 1 and 2 abolish the price, how can one cut the price which does not exist? This is fair enough. Under Clauses 1 and 2—this is the whole purpose of the Bill—the small trader will be protected by being told, "You cannot have a notice from Jones, Brown and Robinson, Limited, saying that the minimum price of an article is 18s. 6d. Jones, Brown and Robinson, Limited, will have to issue a little printed notice saying, 'Under the provisions of the Resale Prices Bill we are not entitled to fix any price for sale, but we advise our customers to sell at not less than 18s. 6d., which, according to the advice of our independent cost accountants and our advisers is the appropriate price to yield an appropriate measure of profit and which mill help to preserve good feeling in the industry'." That is all right. The test is if the dealer sells for less. The right hon. Gentleman has said, "How can one say what is a net price, unless one has laid down a fascinatingly difficult"—I agree with him—" mathematical computation to say what is the wholesale price?".
      I said that it would not affect the big man at all. It is not intended to. Whom does it affect? Yesterday morning someone knocked on my door and offered me what looked like a can of liquid soap, nice and white, with a green label, and so on. It was too difficult a matter for me to decide whether to accept it, so I sent for the master of the house—and she declined it. Had we accepted it, would that have been all right? Was this a loss leader? Can one give things away?
      Let us be serious about this. I can tell the Government what will happen. There are a lot of little pleasant practices which are seasonal practices in retail trading. There is Santa Claus. In the big shops Santa Claus hands out little prizes. There are also little tickets for the bran tub. If one pays 3d., one has the chance of getting 2½d. worth of prize, or 3½d. worth, if one is lucky. Would that be a loss leader? When the House of Commons passes legislation, the first thing that happens is that some silly ass tries to enforce it in the courts. This always happens. Always some busybody of an official with not much to do wants to bring action, or take steps, or test it, or run it out, or

      1131
      trade organisations which want to advertise themselves take action. The little man is the victim.
      I have tried as briefly as I can, and with strict relevance, to move the Amendment, which I consider to be important. I do not believe that Acts should be full of words such as "or a similar". I do not believe that any hon. Member opposite will say that he knows what "the same or a similar" means in relation to goods, except the hon. Member for Tiverton. Subject to that, I do not believe that anybody in the House of Commons can support a system under which supplies can be stopped because someone has reasonable cause to believe. That is the test. It is not because a dealer did it, but because somebody thinks he did it. Not only can Jones Limited, the wholesaler, stop a dealer's supplies, but Brown can stop his supplies, even though he has nothing to do with it and did not supply the goods. This is under the Clause as amended.
      I beg the Committee to ponder. When the right hon. Gentleman, with all his skill, talks about these things, one gets a picture of someone in Birmingham selling something to somebody in Wolverhampton. This is not what happens. It is a case of some one in Plymouth selling something to somebody in Newcastle-upon-Tyne. They do not know that a dealer has done anything. They have "reasonable" cause to believe because they read words in a paper which says so.
      Mr. Winterbottom: Brown may stop supplies when Jones himself has specially asked the retailer to take goods, perhaps at a lower price, to rid him of surplus stock he wants to get rid of.
      Mr. Hale: Of course. It is so obvious that it is hardly worth saying that Brown may have reasonable cause to believe that a dealer has done this because he does not know that Jones gave permission. If Brown is in Newcastle-upon-Tyne and Jones is in Plymouth and I, the little retailer, have my shop in Ashby-de-la-Zouch in the middle of them, what chance have they? This is what happens. This is how life works.
      Finally, the right hon. Gentleman failed to deal with the other question
      1132
      I put to him. Once a wholesaler says, "I will not have anything mare to do with this retailer. I will not supply him with goods. I have reasonable cause to suppose that he has done something wrong because I have received information by post or through the Press that he has done something wrong", that wholesaler is under no obligation to supply when the period of 12 months is over. For him the customer has ceased to exist and the customer has no rights at all.
      9.30 p.m.
      I wish to choose my words with moderation, but I cannot help saying that it is humbug to talk about this in wide terms, because everyone knows that this provision will be brought into operation on different grounds. We all know that if the wholesaler does not want to deal with a retailer he need only say that the retailer was not prompt enough in paying his accounts. If the retailer replies, "I have been prompt", the wholesaler need only say, "In which case the Post Office must have caused the delay or something else, but in any case I will not supply you on these grounds".
      Whatever the merits of the intentions underlying the Clause, I suggest that the terminology of the Measure and the provisions set out in that terminology are impossible to understand, impossible to interpret, impossible to enforce and are largely without meaning.
      Mr. M. Foot: I am surprised that no hon. Member opposite has risen to support the two Amendments which my hon. Friend the Member for Oldham, West (Mr. Hale) has moved so effectively. I should have thought that from the debate that has gone on for the past three-and-a-half hours there would be enough doubt in the minds of hon. Members opposite about the wording of the Government Amendment to make them agree to try to define the Government Amendment more sharply. That is all that my hon. Friend's Amendments seek to do.
      During the three-and-a-half hours we have been discussing this matter a variety of opinions have been expressed. Questions have been asked about what should be done to deal with the problems arising under the Clause and

      1133
      I am surprised—in view of the variety of opinions expressed even on the benches opposite—that some hon. Members opposite have not supported my hon. Friend's Amendments. I hope that they will reconsider their position and do so when I have resumed my seat.
      I find it difficult to understand how anyone could fail to realise that my hon. Friend's Amendments improve the Government Amendment. I do not wish to exaggerate the position or to say that they change the whole Bill. They do make some minor and beneficial adjustments which should be supported by hon. Members opposite. My hon. Friend moved them with such pedantic reference to the precise language in which they are presented that if I do not follow my hon. Friend's remarks exactly I may be excused on the grounds of not wishing to introduce battlements foreign to the discussion.
      The real question which has been facing the Committee for the last three-and-a-half hours is this. Has the Secretary of State, by his Amendment, introduced words which wreck the purpose of the Bill? The fact that the hon. Member for Shipley (Mr. Hirst) and those who have been most critical of the Government from the point of view of wishing to see r.p.m. retained were so ready to approve the Government Amendment indicated that the Secretary of State had gone a long way to wreck the Measure. The hon. Member for Shipley appears to be shaking his head. We agree that he is not a person likely to be soothed too easily or shifted from his opinion. He indicated that he thought that the Government had made a considerable concession to him and his hon. Friends by introducing the Amendment. I am not suggesting that he said that the whole Bill had been improved—just that the Government Amendment had made an appreciable improvement in the Measure.
      Mr. Hirst: So I did, and so did the right hon. Member for Battersea, North (Mr. Jay).
      Mr. Foot: It is interesting to discover that there has been an appreciable improvement in the Bill from the hon. Gentleman's point of view.
      Mr. Hirst: And from the point of view of the right hon. Member for Battersea, North.
      Mr. Foot: I am coming to that. The hon. Member must not distract me. If he does he must pay the penalty.
      It is the fact that what my right hon. Friend the Member for Battersea, North (Mr. Jay) did in his speech was something quite different. He stated at the beginning of the discussion what he thought was the meaning of the Amendment, and he asked the Government whether they agreed with his interpretation. At that point in our proceedings, about 4 o'clock or half past four, everything appeared comparatively clear to the whole Committee, but by 9 o'clock we were back in abysmal darkness, because the Minister's concluding speech denied the implications which my right hon. Friend made at the beginning. That was the whole reason why we voted against that Amendment. The hon. Member for Shipley has not been following the proceedings with his usual acumen. If he had been, he would have understood the meaning of the exchange between his right hon. Friend and my right hon. Friend at the end.
      We get back to the question. Has the Secretary of State introduced an Amendment which goes a considerable way towards wrecking his own Bill? That is what the hon. Member for Shipley wants. If what some hon. Members on the back benches opposite have said was the meaning of the Amendment was true, the right hon. Gentleman would have gone far towards wrecking his Bill, particularly on the question of whether a collective boycott can be applied. My right hon. Friend the Member for Battersea, North was very strong on this, and we never had a clear answer from the Secretary of State.
      If it is true that something approaching a collective boycott can be applied, not only by the first manufacturer who wants to prevent loss leadering by the retailer but by other manufacturers as well, then the right hon. Gentleman has gone very far towards wrecking his own Bill. The question is: does the collective boycott really apply or can it be applied or not? Our Amendment is directed precisely to this question. If the right hon. Gentleman wants to make absolutely sure that

      1135
      a collective boycott cannot be applied in any circumstances he can accept our Amendment. It will go very far towards dealing with the problem. If he says that it does not precisely deal with it, or does not deal with it adequately, he can propose his own words for dealing with it. Let the right hon. Gentleman tell the Committee.
      The right hon. Gentleman has had a different defence for his decision all afternoon. He gave the game away right at the beginning. He thinks that what the Committee has been discussing for the past five hours is complete rubbish. He does not believe that there is any problem of loss leadering. He said on Second Reading that it was not a significant problem at all in his opinion. He reiterated that today at the beginning, but in order to satisfy his hon. Friends he has had to pretend that it is a big problem and that he is dealing with it with an adequate remedy. He is in the position of the doctor described in Gulliver's Travels who invented a large number of imaginary diseases for which he also invented imaginary cures.
      The right hon. Gentleman has said in the House of Commons, "I do not believe that there is any problem about loss leadering. I know that some of my hon. Friends think that there is, but I can produce an Amendment which I do not think alters the position at all but which may satisfy my hon. Friends." This, therefore, is what we have been discussing. The right hon. Gentleman does not think that he has been giving anything away, but we have to examine the exact words. When we examine the exact words of his Amendment we discover that they go very much further than the right hon. Gentleman intended. We are therefore trying to save him from himself. We are trying to assist him.
      If the right hon. Gentleman had wanted to, he could have accepted our Amendment. If he is not going to accept it he must explain to the Committee exactly whether he thinks that the dangers of a collective boycott being applied to the retailer are greater with or without our Amendment. Obviously, if our Amendment is carried and we exclude this vague description of "similar goods" and the vague reference to "other suppliers" then whatever else is done nobody can possibly deny that
      1136
      the right hon. Gentleman's Amendment is much more clearly defined. This also has been one of the major points of controversy throughout the debate.
      It was quite evident that at the end of the debate on the previous Amendment the Committee was much less aware of what it was voting or arguing about than it was at the beginning of the proceedings. Therefore, what we are also doing in the Amendment is to make much clearer what the Bill intends to do. I should have thought that whatever view hon. Members may take about the Amendment and about the Bill as a whole, those who are in favour of resale price maintenance and those who are in favour of abolishing it could all unite to support our Amendment. [Laughter.] Hon. Members may laugh, but it is certainly clearer than the Government's proposals. Those who are laughing have probably not even read our Amendments. Our proposal is certainly clearer in this sense, that we exclude the reference to similar goods, and it is bound to be clearer also inasmuch as we exclude other suppliers. No one can argue about that. The question the Committee has to make up its mind about is this. Do hon. Members want it to be clearer or not?
      9.45 p.m.
      There may be an entirely different explanation of why the Secretary of State, while proposing an Amendment which does not really alter the situation at all, has secured the support of hon. Members opposite who want drastic changes in the Bill. Perhaps they have made a bargain about some other parts of the Bill. If they have, the Committee should be given an explanation about it. Hon. Members opposite have been telling the country that they wanted to clarify the Bill. They have been saying that they wanted a better Bill and have put down Amendments of their own for this purpose. I appeal to them to come and vote with us on these Amendments and not to be afraid.
      I call in aid the speech which the Secretary of State himself made a week or so ago. Hon. Members must not think that they will be reproved by their Whips if they come and vote with us. They need not think that they will get into trouble. The right hon. Gentleman himself has said that in these matters one is enough.

      1137
      A majority of one will satisfy the right hon. Gentleman, whose greatest ambition it is to carry the Bill through by narrow majorities of that kind. I was amazed when I heard that utterance, but I dare say that, following the declaration which the Secretary of State made that a majority of one would satisfy him in these matters, the Chief Whip has received letters from hon. Members opposite in some such terms as these: "Dear Chief, So sorry about Tuesday night. As a matter of fact, if you must know, I was at the club, but I was basing myself also on the theory enunciated by Winston, now backed up by others, that a majority of one is enough. Would you please sort this out with Ted before troubling me further". I am wire that the Chief Whip has received numerous letters of that kind. In one sense, therefore, the Government are encouraging hon. Members opposite to vote according to their consciences in these matters.
      One hon. Member opposite said that we had seen democracy at work that Tuesday night when the Government had a majority of only one. We want to see democracy at work now, and we want to see whether the right hon. Gentleman likes it.
      Mr. Heath: Perhaps it would be for the convenience of the Committee if I dealt now with the points which have been briefly raised by the hon. Members for Oldham, West (Mr. Hale) and for Ebbw Vale (Mr. M. Foot). The position on loss leadering as I have put it to the Committee is quite straightforward. We do not believe that experience in other countries shows that there have been many examples of loss leadering which have done damage to manufacturers or to other businesses. From both sides of the Committee in this long debate very few examples have been given.
      On the other hand, I have stated that it is not a desirable practice and, therefore, we should take as effective action as possible to prevent it happening and to ensure that, should it occur, those concerned are able to take effective action against it. In the Bill, therefore, we should as far as possible provide
      1138
      effective measures. That was the purpose of the Clause as originally drafted.
      I draw to the attention of the hon. Member for Ebbw Vale the fact that in subsection (1) there are the words
      "whether obtained from that supplier or not".
      This is not, therefore, something introduced by he Amendment. It was in the Bill as presented to the House of Commons, because we believed that there should be an effective deterrent to loss leadering should it be attempted. What the hon. Member and his hon. Friends have to decide is whether they wish to try to produce an effective deterrent against loss leadering. This is the question to which they have given no answer. What both of their Amendments do is to weaken the deterrent.
      The hon. Member for Ebbw Vale must make up us his mind whether he thinks that in the Amendments which I am putting forward I am wrecking the Bill, or putting forward Amendments of no consequence, because every intervention which he has made has used both arguments simultaneously. Therefore, he must address himself to the question of an effective deterrent to loss leadering.
      The long speech of the hon. Member for Oldharr, West was the strongest argument against his own Amendment. He gave innumerable examples of similar goods. If we have "the same" goods, it means that if there is loss leadering in one article—say, a particular brand of soap—and if we keep only the word "same" in, suppliers of only that one particular item can be withheld. By including the word "similar", it means that goods of that type, obviously, cannot be defined in a Bill or in a speech, but can be defined by manufacturers. If challenged by the retailer, the matter will have to be dealt with in the Court.
      This would be a much more effective deterrent to loss leadering, to which I understand the greater part of the Committee is opposed, than by simply having the words "the same description" in the Bill. That is why I reject the Amendment.
      Secondly, the hon. Member must make up his mind whether he wants an effective deterrent against loss leadering. The words to which he objects are
      "whether obtained from that supplier or not".

      1139
      If there is an organised boycott, it comes under the 1956 Act. Suppliers can withhold their goods of the same or similar description if they find that loss leadering is going on. I understand that the view of the Committee generally is that if loss leadering is intended it is an objectionable practice from the point of view of the manufacturer because of the possible damage which it can do and from the point of view of retailers and small shopkeepers because if persisted in there is danger that it will put them out of business.
      I understood that these were the considerations in the minds of the hon. Member for Oldham, West and Ebbw Vale. If that is the case, the fact that other suppliers can withhold goods in these circumstances is a much stronger deterrent to loss leadering than if we accept the Amendment. That is why the hon. Member for Ebbw Vale must leave the heights of trying to decide whether the Bill is being wrecked and address his mind to the substance of the case and ask whether he wanted an effective deterrent to loss leadering or not.
      Mr. M. Foot: I am in favour of having an effective deterrent against loss leadering if it can be devised, but that is an extremely difficult thing to do, as this discussion has proved, because it cannot be defined. The right hon. Gentleman, in refusing to answer questions, has shown that it cannot be defined. But I go further—and this is the point that I was arguing and to which the right hon. Gentleman has not attempted to reply. Even though we may try to obtain an effective deterrent to loss leadering, what we are not entitled to do is to create a deterrent to loss leadering which inflicts, or may inflict, a gross injustice on some retailers. If the right hon. Gentleman's deterrent reintroduces the possibility of a collective boycott, he is doing precisely that.
      Mr. Heath: The hon. Member has shown no way in which this would be unjust to a retailer who was loss-leadering. He is playing with words like "boycott" or "possible boycott". If this is organised by suppliers, it can be dealt with by the 1956 Act. If the individual supplier sees that a retailer is loss leadering, and another supplier is
      1140
      withholding supplies justifiably, and that that action has not been challenged in the Court, then he himself will also be entitled, both under the Bill and the Amenrdment, to withhold supplies. That is a very effective deterrent to the retailer who may be attempting loss leadering. It is not an injustice.
      The hon. Member for Oldham, West asked about the position of a man loss leadering with the permission of the manufacturer. He asked whether other suppliers can withhold supplies. The answer is that they cannot. Under the Bill, the retailer will not be loss leadering because he has the permission of the supplier concerned and, therefore, other suppliers will not be able to withhold supplies. There is no question of injustice in that case.
      Mr. Hale: I said that the test is whether there is reasonable cause to believe and the supplier has reasonable cause to believe because all he knows is that the man is cutting prices and selling what appear to be loss leaders. Surely the supplier has no method of knowing that the retailer has permission from the other manufacturers concerned unless he starts a wholesale investigation, employing detectives and accountants. He will surely have reasonable cause to believe, even if he is wrong in fact.
      Mr. Heath: But he has not reasonable cause to believe, and the hon. Member knows quite well that the supplier can be taken to the Court either by the retailer or the Board of Trade if he withholds supplies unjustifiably. As a supplier he will take great care to ascertain from the retailer what the circumstances are. If he finds that the retailer is selling these goods with the permission of the supplier concerned then he cannot withhold his own supplies because he will be at risk if he does.
      This matter must be taken with a certain degree of seriousness, however entertaining the address of the hon. Member. We must be realistic and realise that there is no injustice involved here but that there is an effective deterrent to the retailer who may be tempted to loss leader. For these very powerful reasons, I suggest that we reject the Amendment.
      Mr. A. J. Irvine: For the second time today I find myself privileged to support my hon. Friend the Member for Oldham, West (Mr. Hale). His Amendment raises interesting and important points and I am not satisfied that the right hon. Gentleman has dealt with them. My hon. Friend wishes to delete from the Clause the words
      "…whether obtained from that supplier or not".
      If these words were omitted I believe that the Clause would still mean exactly the same as it means now. I think that my hon. Friend is seized of that fact himself. There certainly is a drafting difficulty. If the words are omitted, then it is simply for the purpose of producing what is hoped will be greater clarity. I do not think that the general effect of the Clause would be altered.
      My hon. Friend was on a much more important question, however, which cannot be shrugged aside by a drafting point. I agree that there is a need for some change in the wording such as was attempted by him in his Amendment designed to deal with the danger of collective boycotting. I listened with great care to what the right hon. Gentleman said, but his argument is that we do not need to feel any anxiety about the possibility of a collective boycott because that would be sufficiently dealt with by the 1956 Act.
      But then there is also the question of simultaneous action by suppliers. There could be simultaneous action, which is something quite different from collective boycott, but in respect of which, none the less, it is very desirable that some provision should be made.
      It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
      Committee report Progress.

    BUSINESS OF THE HOUSE
    Ordered,
    That the Proceedings on the Resale Prices Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Hughes-Young.]

RESALE PRICES BILL
Again considered in Committee.
Question again proposed.
Mr. Irvine: What we say at this point is that the event of simultaneous action being taken by suppliers is not sufficiently or adequately safeguarded by the provisions in the 1956 Act relating to collective toycotts and collective agreements among suppliers. We regard ourselves as reasonably reinforced in that view by the reflection that in its experience of the operation of the 1956 Act the Restrictive Practices Court has found the greatest difficulty in the treatment of information agreements. There was a loophole in the 1956 Act in that respect which gave rise to the need to make further inquiries and we understand that the desire for these further inquiries was initiated by the Registrar and the need for some treatment of the matter accepted by the Government.
Under all the heads of collective boycott, information agreements and simultaneous action, there are situations with which it is important to deal expressly in the Bill. My hon. Friend's second Amendment sought to deal with this matter and we are asking for an undertaking by the Government that the matter will be further considered, because it is important and serious.
On my hon. Friend's first Amendment, the point with which the Committee is concerned is that under the Bill it is to be not unlawful to withhold supplies of goods to a dealer engaged in loss leadering in certain circumstances. The question arises how closely should the practice of loss leadering be related for the purposes of the Bill to the character of the goods being withheld. That seems to be a very important question and it is dealt with seriously and constructively in my hon. Friend's first Amendment.
If what the Bill was doing was to make the practice of loss leadering unlawful, as the hon. Member for Shipley (Mr. Hirst) sought to do in an Amendment he moved earlier—
Mr. Hirst: I did not move it. I said that it was on the Notice Paper in

1143
advance of the Government's comparable Amendment, but that I accepted the Government's Amendment subject to certain conditions.
Mr. Irvine: I am obliged to the hon. Gentleman. I should have said that he had tabled that Amendment.
My point is that if the Bill were making the practice of loss leadering unlawful, in that context any exercise of the practice should make the with-holding of goods lawful. If the purpose of the Government is to make the whole practice contrary to the public interest and unlawful, then any type of with-holding of goods and supplies from anybody carrying on that practice should be justified.
But that is not what is proposed. That is not the basis of the Bill. That being so, I should have thought that the practice of loss leadering for the purpose of the Bill should be very closely related to the character of the goods being with-held. That seems to be the logic and good sense of the position.
On that point of criticism, the first Amendment to the Amendment not only has the purpose that I have sought to indicate, but has that effect, because if one leaves out the words "or a similar description" and one is left with the words "of the same description", that markedly and clearly narrows the scope of the loss leadering which may have the effect envisaged by the Bill.
With those observations to put before the Committee, I would strongly recommend support for the first of my hon. Friend's Amendments, and I would also hope that we would find general agreement, at any rate, with the purpose that he entertained when he put down his second Amendment.
Mr. Paget: Perhaps I might ask my hon. Friend one question: is the position as the Bill stands without the Amendment that if a trade journal of the tobacco manufacturers says that Messrs. Jones and Company have used cigarettes as a loss leader, then every cigarette manufacturer reading that in the journal has reasonable grounds for believing that cigarettes are being used as a loss leader, and a collective boycott by consent, or a simultaneous boycott,
1144
then results, and as the Clause is drafted at the moment that is proper?
Mr. Irvine: As far as I understand the matter, my hon. and learned Friend has expresed it correctly.
Mr. Winterbottom: I think that I ought to reply to the right hon. Gentleman's challenge about loss leaders. I have been against them all my life, and have suffered from them. The original Clause and the Amendment will not only not affect loss leaders, but will to a large extent promote them.
The question of loss leaders is not always a problem of retailing. It is sometimes a problem of wholesaling as well. Many of the loss leaders are promoted by the suppliers of goods themselves. Because of the stocks that they hold, and the need to turn over those stocks, many of the so-called loss leaders are thrown into the retail shops of the country. By the Amendment we are putting the responsibility for deciding what are loss leaders on to the shoulders of some people who want them. That is the paradox of the right hon. Gentleman's Amendment.
I want to tell the right hon. Gentleman that, so that there will be no doubt about it in the future. Wholesalers will still use this method of getting rid of bulk consumption goods. They will use retailing establishments for loss leadering. But they are the very persons whom the right hon. Gentleman is making responsible for exercising judgment in this matter.
Twelve months ago, in the City of Sheffield, Nescafé was being sold in Woolworth's establishments at less than the wholesale price, including cash discount. The result was that Woolworth's was capturing a tremendous amount of trade from many other retail establishments. I wrote to Nescafé asking for an explanation, and received a reply to the effect that the firm could not interfere; it got its price, and so it was satisfied.
If we consider the question from that point of view we see that there is a temptation to indulge in loss leadering not on the part of retailers but on the part of wholesalers, upon whose shoulders we are placing responsibility for judgment. This will create a new situation in the distributive trade, in

1145
which the law will be flouted by the very people who are to be asked to be the first judges of the undesirable practice of loss leadering.
That point must be made before a decision is taken on the matter. The right hon. Gentleman must be told that he is making a tremendous mistake.
Mr. M. Foot: The right hon. Gentleman put a perfectly direct question to me, and he is entitled to have a reply. He asked whether I wanted to see an effective deterrent against loss leadering. I am in favour of such an effective deterrent, if it can be found, but I do not believe that what the right hon. Gentleman has put forward is an effective deterrent. I very much doubt whether he thinks that it is, either, because in the Second Reading debate he told us that every country that has attempted to deal with loss leadering has found it immensely difficult.
The right hon. Gentleman did not say that it is impossible to find the solution, but he said that it is immensely difficult. He is now trying to pretend that he has solved this immensely difficult problem, and has produced an effective deterrent in his Amendment, which we know is an entirely subjective one. When he is confronted with his own words I doubt whether he will claim that this is an effective deterrent. When he examines it he will discover that he has produced an effective deterrent only in so far as he is inflicting an injustice upon the retailer.
That is the exact point which was put by my hon. and learned Friend the Member for Northampton (Mr. Paget) and my hon. Friend the Member for Oldham, West (Mr. Hale). If the right hon. Gentleman can produce an effective deterrent against loss leadering which is clear and understandable, and which gives proper instructions to the courts as to how they should interpret it, the Committee will vote for it. But the right hon. Gentleman has not done that. Instead, he has produced a shoddy Amendment, which cannot be explained—a piece of fudge which will lead to misinterpretations and injustices in the Court, and which may do grave damage
1146
to the very purposes that he claims he is trying to carry out in the Bill.
10.15 p.m
That is why I was entitled, at the beginning of my remarks, to say that the question that we have been debating all day is whether the right hon. Gentleman is introducing an Amendment which wrecks his Bill. It is no good saying that it does not arise, because the more effective we make the Bill against every conceivable form of loss-leadering, he more we would be interfering with the purpose of abolishing resale price maintenance. Nobody can deny that proposition. It is, therefore, a delicate matter to deal with. The right hon. Gentleman asked me a question as if it solved the whole issue. He asked whether I agreed that we needed an effective deterrent against loss-leadering, as if that what he has been presenting to the Committee throughout today, when he knows probably better than anybody else that what he proposed is nothing of the kind.
Mr. Heath: Had the hon. Member for Ebbw vale (Mr. M. Foot) heard my remarks on starting this series of Amendments, I quoted from my Second Reading speech exactly the words which he has read, because I emphasised again the difficulty of dealing with this problem. All I would say to the hon. Member is that the Amendment which his hon. Friend the Member for Oldham, West (Mr. Hale) has moved would only weaken such effectiveness as we have been able to create. It does not prevent injustice to the retailer, nor is it compatible with the whole purpose of removing r.p.m. except where there is exemption.
The purpose is to allow the consumer to get the benefit, through reduced prices, of improved retailing. But it was not the intention that this practice, if there should be any intention to introduce it, should be pursued. I made clear at the time that although the risks were small and past experience shows that there is little of it, one should do what one can to prevent it. That is what we have done in our Amendments. What the hon. Member and his hon. Friends propose would only weaken what we have been able to do.
Question put, That "or a similar" stand part of the proposed Amendment:—
The Committee divided: Ayes 249, Noes 177.

Division No. 62.]

AYES

[10.17 p.m.

Agnew, Sir Peter

Goodhew, Victor

Maude, Angus (Stratford-on-Avon)

Allason, James

Gough, Frederick

Maudling, Rt. Hon. Reginald

Amery, Rt. Hon. Julian

Gower, Raymond

Mawby, Ray

Arbuthnot, John

Grant-Ferris, R.

Maxwell-Hyslop, R. J.

Atkins, Humphrey

Green, Alan

Maydon, Lt.-Cmdr. S. L. C.

Awdry, Daniel (Chippenham)

Gresham Cooke, R.

Mills, Stratton

Barber, Anthony

Grimond, Rt. Hon. J.

Miscampbell, Norman

Barlow, Sir John

Grosvenor, Lord Robert

Montgomery, Fergus

Barter, John

Gurden, Harold

More, Jasper (Ludlow)

Batsford, Brian

Hamilton, Michael (Wellingborough)

Morgan, William

Bevins, Rt. Hon. Reginald

Harrison, Col. Sir Harwood (Eye)

Mott-Radclyffe, Sir Charles

Biffen, John

Harvey, Sir Arthur Vere (Macclesf'd)

Neave, Airey

Bingham, R. M.

Harvey, John (Walthamstow, E.)

Nicholls, Sir Harmar

Birch, Rt. Hon. Nigel

Harvie Anderson, Miss

Noble, Rt. Hon. Michael

Bishop, F. P.

Hastings, Stephen

Nugent, Rt. Hon. Sir Richard

Black, Sir Cyril

Hay, John

Orr-Ewing, Sir Ian (Hendon, North)

Bourne-Arton, A.

Heald, Rt. Hon. Sir Lionel

Page, John (Harrow, West)

Box, Donald

Heath, Rt. Hon. Edward

Page, Graham (Crosby)

Boyd-Carpenter, Rt. Hon. John

Hendry, Forbes

Pannell, Norman (Kirkdale)

Boyle, Rt. Hon. Sir Edward

Hiley, Joseph

Pearson, Frank (Clitheroe)

Braine, Bernard

Hill, Mrs. Eveline (Wythenshawe)

Peel, John

Brewis, John

Hill, J. E. B. (S. Norfolk)

Percival, Ian

Bromley-Davenport, Lt.-Col. Sir Walter

Hirst, Geoffrey

Peyton, John

Brown, Alan (Tottenham)

Hobson, Rt. Hon. Sir John

Pickthorn, Sir Kenneth

Bryan, Paul

Hocking, Philip N.

Pike, Miss Mervyn

Buck, Antony

Hogg, Rt. Hon. Quintin

Pitman, Sir James

Bullard, Denys

Holland, Philip

Pitt, Dame Edith

Bullus, Wing Commander Eric

Hollingworth, John

Pounder, Rafton

Campbell, Gordon

Holt, Arthur

Powell, Rt. Hon. J. Enoch

Carr, Robert (Mitcham)

Hopkins, Alan

Price, David (Eastleigh)

Cary, Sir Robert

Hornby, R. P.

Prior, J. M. L.

Chataway, Christopher

Howard, Hon. G. R. (St. Ives)

Prior-Palmer, Brig. Sir Otho

Clark, Henry (Antrim, N.)

Hughes Hallett, Vice-Admiral John

Proudfoot, Wilfred

Clark, William (Nottingham, S.)

Hughes-Young, Michael

Quennell, Miss J. M.

Cleaver, Leonard

Hulbert, Sir Norman

Ramsden, Rt. Hon. James

Cole, Norman

Hurd, Sir Anthony

Rawlinson, Rt. Hon. Sir Peter

Cooke, Robert

Hutchison, Michael Clark

Redmayne, Rt. Hon. Martin

Cooper-Key, Sir Neill

Iremonger, T. L.

Rees, Hugh (Swansea, W.)

Corfield, F. V.

Irvine, Bryant Godman (Rye)

Renton, Rt. Hon. David

Costain, A. P.

James, David

Ridley, Hon. Nicholas

Coulson, Michael

Johnson, Eric (Blackley)

Ridsdale, Julian

Courtney, Cdr. Anthony

Johnson Smith, Geoffrey

Rippon, Rt. Hon. Geoffrey

Critchley, Julian

Jones, Arthur (Northants, S.)

Roots, William

Crowder, F. P.

Joseph, Rt. Hon. Sir Keith

Ropner, Col. Sir Leonard

Curran, Charles

Kaberry, Sir Donald

Royle, Anthony (Richmond, Surrey)

Currie, G. B. H.

Kerans, Cdr. J. S.

Russell, Sir Ronald

Dalkeith, Earl of

Kerr, Sir Hamilton

Scott-Hopkins, James

Dance, James

Kershaw, Anthony

Seymour, Leslie

d'Avigdor-Goldsmid, Sir Henry

Kirk, Peter

Sharples, Richard

Deedes, Rt. Hon. W. F.

Kitson, Timothy

Shaw, M.

Digby, Simon Wingfield

Lancaster, Col. C. G.

Shepherd, William

Donaldson, Cmdr. C. E. M.

Leather, Sir Edwin

Skeet, T. H. H.

Douglas-Home, Rt. Hon. Sir Alec

Legge-Bourke, Sir Harry

Smith, Dudley (Br'ntf'd & Chiswick)

Drayson, G. B.

Lindsay, Sir Martin

Smyth, Rt. Hon. Brig. Sir John

du Cann, Edward

Linstead, Sir Hugh

Spearman, Sir Alexander

Duncan, Sir James

Litchfield, Capt. John

Stainton, Keith

Eden, Sir John

Lloyd, Rt. Hon. Selwyn (Wirral)

Stanley, Hon. Richard

Elliott, R. W. (Newc'tle-upon-Tyne, N.)

Longbottom, Charles

Stevens, Geoffrey

Emery, Peter

Longden, Gilbert

Stodart, J. A.

Erroll, Rt. Hon. F. J.

Loveys, Walter H.

Stoddart-Scott, Col. Sir Malcolm

Farr, John

Lubbock, Eric

Taylor, Sir Charles (Eastbourne)

Fell, Anthony

Lucas-Tooth, Sir Hugh

Taylor, Frank (M'ch'st', Moss Side)

Finlay, Graeme

McAdden, Sir Stephen

Thatcher, Mrs. Margaret

Fisher, Nigel

MacArthur, Ian

Thomas, Sir Leslie (Canterbury)

Fletcher-Cooke, Charles

McLaren, Martin

Thomas, Peter (Conway)

Fraser, Rt. Hn. Hugh (Stafford & Stone)

Maclean, Sir Fitzroy (Bute & N. Ayrs)

Thompson, Sir Richard (Croydon, S.)

Fraser, Ian (Plymouth, Sutton)

McLean, Neil (Inverness)

Thorneycroft, Rt. Hon. Peter

Freeth, Denzil

McMaster, Stanley R.

Thornton-Kemsley, Sir Colin

Galbraith, Hon. T. G. D.

Macmillan, Maurice (Halifax)

Tiley, Arthur (Bradford, W.)

Gammans, Lady

Maddan, Martin

Tilney, John (Wavertree)

Gardner, Edward

Maginnis, John E.

Turner, Colin

Gibson-Watt, David

Maitland, Sir John

Turton, Rt. Hon. R. H.

Gilmour, Ian (Norfolk, central)

Markham, Major Sir Frank

Tweedsmuir, Lady

Gilmour, Sir John (East Fife)

Marples, Rt. Hon. Ernest

van Straubenzee, W. R.

Glover, Sir Douglas

Marten, Neil

Vane, W. M. F.

Glyn, Dr. Alan (Clapham)

Mathew, Robert (Honiton)

Vickers, Miss Joan

Godber, Rt. Hon. J. B.

Matthews, Gordon (Meriden)

Wade, Donald

Goodhart, Philip

Walker-Smith, Rt. Hon. Sir Derek

Williams, Paul (Sunderland, S.)

Woodnutt, Mark

Ward, Dame Irene

Wills, Sir Gerald (Bridgwater)

Worsley, Marcus

Watkinson, Rt. Hon. Harold

Wilson, Geoffrey (Truro)

Yates, William (The Wrekin)

Webster, David

Wise, A. R.

Wells, John (Maidstone)

Wolrige-Gordon, Patrick

TELLERS FOR THE AYES:

Whitelaw, William

Wood, Rt. Hon. Richard

Mr. Chichester-Clark and

Williams, Dudley (Exeter)

Woodhouse, C. M.

Mr. Pym.

NOES

Abse, Leo

Ginsburg, David

O'Malley, B. K.

Ainsley, William

Gordon Walker, Rt. Hon. P. C.

Oram, A. E.

Allaun, Frank (Salford, E.)

Gourley, Harry

Oswald, Thomas

Awbery, Stan (Bristol, Central)

Griffiths, David (Rother Valley)

Padley, W. E.

Bacon, Miss Alice

Griffiths, Rt. Hon. James (Llanelly)

Paget, R. T.

Barnett, Guy

Griffiths, W. (Exchange)

Parker, John

Baxter, William (Stirlingshire, W.)

Hale, Leslie (Oldham, W.)

Pavitt, Laurence

Beaney, Alan

Hamilton William (West Fife)

Pearson, Arthur (Pontypridd)

Ballenger, Rt. Hon. F. J.

Hannan, William

Peart, Frederick

Bence, Cyril

Harper, Joseph

Pentland, Norman

Bann, Anthony Wedgwood

Hart, Mrs. Judith

Prentice, R. E.

Bennett, J. (Glasgow, Bridgeton)

Hayman, F. H.

Price, J. T. (Westhoughton)

Benson, Sir George

Henderson, Rt. Hn. Arthur (Rwly Regis)

Probert, Arthur

Blackburn, F.

Herbison, Miss Margaret

Randall, Harry

Blyton, William

Hill, J. (Midlothian)

Redhead, E. C.

Boardman, H.

Holman, Percy

Rees, Merlyn (Leeds, S.)

Bottomley, Rt. Hon. A. G.

Houghton, Douglas

Rhodes, H.

Bowden, Rt. Hn. H. W. (Leics, S.W.)

Howell, Denis (Small Heath)

Roberts, Albert (Normanton)

Bowen, Roderic (Cardigan)

Howie, W.

Robertson, John (Paisley)

Bowles, Frank

Hoy, James H.

Robinson, Kenneth (St. Pancras, N.)

Braddock, Mrs. E. M.

Hughes, Cledwyn (Anglesey)

Rodgers, W. T. (Stockton)

Broughton, Dr. A. D. D.

Hughes, Emrys (S. Ayrshire)

Rogers, G. H. R. (Kensington, N.)

Butler, Herbert (Hackney, C.)

Hughes, Hector (Aberdeen, N.)

Ross, William

Callaghan, James

Irvine, A. J. (Edge Hill)

Silverman, Julius (Aston)

Carmichael, Neil

Irving, Sydney (Dartford)

Silverman, Sydney (Nelson)

Castle, Mrs. Barbara

Janner, Sir Barnett

Skeffington, Arthur

Chapman, Donald

Jay, Rt. Hon. Douglas

Slater, Mrs. Harriet (Stoke, N.)

Cliffe, Michael

Jenkins, Roy (Stechford)

Slater, Joseph (Sedgefield)

Collick, Percy

Johnson, Carol (Lewisham, S.)

Small, William

Craddock, George (Bradford, S.)

Jones, Don (Burnley)

Smith, Ellis (Stoke, S.)

Crosland, Anthony

Jones, Elwyn (West Ham, S.)

Snow, Julian

Grossman, R. H. S.

Jones, T. W. (Merioneth)

Sorensen, R. W.

Cullen, Mrs. Alice

Kelley, Richard

Spriggs, Leslie

Dalyell, Tam

Kenyon, Clifford

Stonehouse, John

Darling, George

Lawson, George

Stones, William

Davies, G. Elfed (Rhondda, E.)

Lee, Frederick (Newton)

Strauss, Rt. Hn. G. R. (Vauxhall)

Davies, Ifor (Gower)

Lever, L. M. (Ardwick)

Stross, Sir Barnett (Stoke-On-Trent, C.)

Davies, S. O. (Merthyr)

Lewis, Arthur (West Ham, N.)

Swain, Thomas

Delargy, Hugh

Loughlin, Charles

Swingler, Stephen

Dempsey, James

Mabon, Dr, J. Dickson

Symonds, J. B.

Diamond, James

McBride N.

Taylor, Bernard (Mansfield)

Dodds, Norman

McCann, J.

Thomas, Iorwerth (Rhondda, W.)

Donnelly, Desmond

MacColl, James

Thompson, Dr. Alan (Dunfermline)

Driberg, Tom

MacDermot, Niall

Thornton, Ernest

Duffy, A. E. P. (Colne Valley)

McInnes, James

Wainwright, Edwin

Edelman, Maurice

MacPherson, Malcolm

Warbey, William

Edwards, Rt. Hon. Ness (Caerphilly)

Mallalieu, E. L. (Brigg)

Watkins, Tudor

Edwards, Robert (Bilston)

Manuel, Archie

Wells, William (Walsall, N.)

Edwards, Robert (Stepney)

Mapp, Charles

White, Mrs. Eirene

Evans, Albert

Marsh, Richard

Whitlock, William

Ferny hough, E.

Mason, Roy

Wilkins, W. A.

Finch, Harold

Mendelson, J. J.

Willey, Frederick

Fitch, Alan

Millan, Bruce

Wilson, Rt. Hon. Harold (Huyton)

Fletcher, Eric

Milne, Edward

Winterbottom, R. E.

Foot, Dingle (Ipswich)

Mitchison, G. R.

Woof, Robert

Foot, Michael (Ebbw Vale)

Monslow, Walter

Wyatt, Woodrow

Forman, J. C.

Morris, Charles (Openshaw)

Yates, Victor (Ladywood)

Fraser, Thomas (Hamliton)

Mulley, Frederick

Galpern, Sir Myer

Neal, Harold

TELLERS FOR THE NOES:

George, Lady Megan Lloyd (Crmrthn)

Oliver, G. H.

Mr. Charles A. Howell and

Mr. Grey.

The Chairman: The next Amendment is that in the name of the hon. Member for Shipley (Mr. Hirst), to leave out lines 14 to 16 of the right hon. Gentleman's proposed Amendment. With this it will be possible to discuss the two Amendments—that in the name of the hon. Baronet the Member for Bournemouth, West (Sir J. Eden), in line 15, to leave out from "or" to the end of line 16 and to add
"in the case of goods made to the order of a supplier of that supplier";
and that in the name of the hon. Member for Shipley, in line 15, to leave out from "or" to the end of line 16 and to add
"in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier".
If it is so desired, there can be a second Division on the second Amendment of the hon. Member for Shipley.
Mr. Hirst: I beg to move, as an Amendment to the proposed Amendment, to leave out lines 14 to 16.
This Amendment was put down a long time ago in order to provide, as it were, a vacuum for finding the right words, which my hon. Friends and I felt were essential to make the Government's Amendment fully acceptable. It is not my purpose to press this Amendment, although I am keen on my second Amendment. As a matter of procedure, that cannot be moved at present although, Sir William, you have kindly given permission for these Amendments to be discussed together.
The Government Amendment on which we have spent much time has aroused a fair amount of misunderstanding, but apart from the hon. Member for Ebbw Vale (Mr. M. Foot), hon. Members have accepted it as an improvement on the original drafting of the Bill. It does not in any way wreck my right hon. Friend's Bill.
10.30 p.m.
What it does do is to make it a little fairer to a certain number of people who are worried about the Bill, and it gives them a bit more confidence. It is not a major matter, but it is an acceptable and a desirable one, and therefore I welcome it and I stick to that. It does, however, open—according
1152
to one's views—some serious criticism; at any rate one considerable criticism, and that is limited to the last words of the Amendment:
"or of the supplier from whom the dealer acquired the goods."
I should like to make clear that there is and could be no difficulty, no criticism whatever, about a manufacturer giving permission or giving consent as to what price his goods should be sold at, or giving permission to cut it. That is nothing new. That has always been the case. Even under r.p.m. the price could actually be laid down at which the goods could be sold. If he likes to give permission to the retailer to cut a certain price, that is perfectly in order. It is nothing new, nothing original; the manufacturer has always had that say.
But there are certain dangers in continuing down the distributive chain where the supplier thinks the manufacturer has given that permission. Under the provisions of the Clause at the moment the manufacturer may not withhold supplies from the wholesaler or supplier who has sold to a chain of shops—[Interruption.] I wish my hon. Friends were less noisy in their conversation. It would help me materially. I am moving an Amendment to the Amendment which, I hope, many of them approve. He has sold to a chain of shops which can resell them for one of the improper purposes mentioned in Clause 2; that is, of course, if the wholesaler has consented to such a resale. The manufacturer is, therefore, by the consent, hamstrung or caught by the wholesaler over whom he has no control, and is powerless to prevent a repetition of that occurrence we have discussed today and said should not take place.
If that is the position, the arrangement tied up and qualified, as I shall show in a minute there would be no objection to it because it would come under the same consideration which applied to the manufacturer, but there is a conceivable danger that there could be a sort of bogus wholesaler, or a sort of organisation which is separate, a corporate body collected together, not necessarily for this purpose, but which

1153
might have been in existence for some time, deciding to issue a notice saying in effect that the secretary to the company is empowered so to do, and to send a circular to say that the goods can be cut—giving that sort of consent.
That is not exactly what we are desiring to do; it is not the protection we desire to give: it is the opposite. The point is, can we find a way of ensuring the purpose my right hon. Friend has in the Bill, and about which I have no argument, and about which there is no argument here among my hon. Friends on these benches, that a manufacturer in certain circumstances ought to be allowed to give that particular consent, but keep out that type of consent which should not be given?
The words of the Amendment in the name of my hon. Friend the Member for Bournemouth, West (Sir J. Eden) gave birth, if I may use that phrase, to the thought among my hon. Friends and to myself as to how to go about it, and in my second Amendment to the Amendment we have followed my hon. Friend's words. I hope that he does not mind. I should like to feel that he is flattered that we have substantially followed his words. But vie have gone one better. There is, as I see it, and as I am advised, a loop-hole in the words which my hon. Friend found. It is important that we should cover the type of transaction we are seeking to avoid. I say that because the necessity to cover that has been the whole purpose of our discussion on the Government Amendment, paragraph (b) of which states:
"where the goods are resold as mentioned in this section with the consent of the manufacturer of the goods or of the supplier from whom the dealer acquired the goods."
My hon. Friends and I have endeavoured in our second Amendment to cover the position by saying:
"…in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier."
These may be considered to be dreadful words and I agree that they are somewhat complicated, but they simply mean that where a supplier to a retailer orders goods from a manufacturer and the goods are to be made to his expressed requirements, trade mark or design, it shall be regarded that those goods were, as it were, manufactured by that supplier himself. I
1154
hope that that is what my right hon. Friend is seeking to achieve. He indicated earlier that he recognises that certain feelings exist about this difficulty and the use of the word "supplied". I hope that the Amendments achieve the object which many hon Members have in mind—including, I hope, my right hon. Friend—and if he cannot accept them I hope that he will accept the principle involved and introduce Government Amendments to the same effect at a later stage.
Mr. Crosland: On a point of order. It is hard to concentrate on these very detailed are complicated arrangements when all our minds are perturbed by anxiety about when the General Election will be held. Since the Prime Minister is present—
The Chairman: Order. We must speak to the Amendment.
Mr. Crosland: On a point of order—
The Chairman: Order.
Mr. Crosland: On a new point of order.
The Chairman: If the hon. Member wishes to raise a new point of order, then by all means let him do so.
Mr. Crosland: I am delighted to see that the Prime Minister is not only here but that he is making notes for perhaps a pronouncement of some sort. I wonder if we might invite him, through you, Sir William, to make a statement about the date of the General Election?
The Chairman: That is, in fact, the same point, and it is not a point of order.
Mr. Mendelson: On a completely different point of order. As the hon. Member for Shipley (Mr. Hirst) moved both of his Amendments, will it be in order for me to discuss them both?
The Chairman: Yes. In practice the hon. Member for Shipley (Mr. Hirst) moved his first Amendment, but both are being discussed together, along with the Amend gent in the name of the hon. Member for Bournemouth, West (Sir J. Eden).
Mr. Mendelson: Then, if I may, I shall address myself to the two Amendments in the name of the hon. Member for Shipley. As he said that he

1155
would not press the first of them I shall not spend much time on it, but in any case I could not have supported it because there are certain circumstances in which it is decidedly to the benefit of the consumer, and does no harm to any retailer, if certain goods can be sold more cheaply. As we all agreed in our support of any method which makes it easier for savings to be passed to the consumer, that is an Amendment I would not have been able to support.
I very strongly support the hon. Member's second Amendment, which deals with a very important experience of the last 10 years. We are here dealing with the danger of bogus manufacturers entering into agreements in order to re-introduce the loss leadering, against which we are trying to guard, by making it appear that they are genuine manufacturers dealing in all sorts of goods when they are, in fact, established only for the one purpose of producing certain cheap goods which could then be introduced to undermine the position of legitimate traders and do equal harm to the retailer and the genuine manufacturer.
During the last 10 or 12 years, and until quite recently, the country was plagued by what was known as the "dutch auction" sale. In many of our towns and cities we had this performance by a number of people specially trained, I believe, in charm schools and semi-theatrical companies, trying, and very often succeeding, in bamboozling people with very little money to spend, and who found themselves so bamboozled that in one Saturday afternoon they might part with 50 per cent. of the wages they had just that day received.
In investigating that abuse, hon. Members found that most of the goods supplied to these "dutch auction" sales were produced by a special group of manufacturers who concentrated almost exclusively, or even quite exclusively, on producing that kind of rubbish. It is with that experience in mind that I strongly support the second Amendment, which I should have thought would have commended itself to the right hon. Gentleman. If the purpose is to make sure that nobody can drive a coach-and-
1156
four through paragraph (b), he should find no difficulty in accepting the Amendment, and I hope that he will do so. Otherwise, I hope that my right hon. and hon. Friends will support it in the Division Lobby.
Sir John Eden: Throughout our discussions we have found it very difficult to cater for every eventuality, but we have here one further attempt to cover particular cases that might arise, and to ensure that the law is not put into complete disrepute. I thought my own Amendment was very good until I read that in the name of my hon. Friend the Member for Shipley (Mr. Hirst) and heard his speech. Quite frankly, I think that his explanation fully justifies his Amendment, completely absorbs my own, and to some extent extends it. It merely takes into account a further possibility.
10.45 p.m.
I agree with my hon. Friend that we are here trying to envisage the sort of circumstances in which the supplier virtually takes the place of the manufacturer, and where the dealer is selling at prices agreed by his supplier.
This, I should have thought, is what my right hon. Friend had in mind basically from the start. I therefore am inclined not to press my Amendment but rather to support that of my hon. Friend the Member for Shipley. I hope that my right hon. Friend will find it possible to accept that as meeting the case which I had in mind and which I hope he will agree is valid in the circumstances.
Mr. W. Wells: Circumstances have made it unnecessary for me to say anything about the Amendment in the name of the hon. Member for Bournemouth, West (Sir J. Eden). Nor could we in the circumstances support the first Amendment in the name of the hon. Member for Shipley (Mr. Hirst), but the hon. Member's second Amendment seems to be a different case. As we see it, this is a genuine attempt to meet a genuine difficulty, and anything that would have the effect of preventing bogus transactions between bogus manufacturers and suppliers who intended to carry out the practice of loss leading would have our support.
My only doubt is whether this Amendment is effective for the purpose. I

1157
hope that the Secretary of State will say that he appreciates the difficulty to which the hon. Member for Shipley has drawn the Committee's attention and will look further into the matter. That would seem to us to be a happy and sensible way of resolving this difficulty. Nevertheless, although I have my doubts whether the hon. Member's Amendment will go very far in the direction in which we all intend, it will go some distance, and unless the right hon. Gentleman is able to give some assurance that he will seek at a later stage of the Bill to carry out his hon. Friend's intentions, we should certainly be minded to support the hon. Member's Amendment in the Division Lobby.
Mr. Heath: As I explained when I moved the main Amendment, we have inserted subsection (2, b) because we thought that it was right that it should be possible for the retailer, on application to the manufacturer, to be able to sell goods which otherwise by definition would be loss leadering. I think that that has had the general support of the Committee and therefore I am glad to hear from my hon. Friend the Member for Shipley (Mr. Hirst) that he does not wish to press his first Amendment to exclude the whole of paragraph (b). I believe that that is a justifiable provision to include in the approach which we are now making.
It is, however, also true that the second half of paragraph (b):
"…or of the supplier from whom the dealer acquired the goods."
is open to the objection mentioned by my hon. Friends the Member for Shipley, the Member for Bournemouth, West (Sir J. Eden) and the hon. and learned Member for Walsall, North (Mr. W. Wells). It would allow what has been termed bogus organisations to take advantage of this and give permission for loss leading over the head of the genuine manufacturer. I therefore would agree that the second half is not entirely satisfactory because of this loophole.
The Amendment in the name of my hon. Friend the Member for Bournemouth, West would deal with most of the cases with which we want to deal. In other words, it would arrange for a
1158
person who is acting in the position of a manufacturer, ordering goods for his own supply and to his own characteristics, to be in a position to give permission without retailers creating an organisaticn which was not really a supplying organisation and granting the permission to themselves. But I agree with my hon. Friend the Member for Bournemouth. West that the second Amendment in the name of my hon. Friend the Member for Shipley is more explicit in this case in its reference to
"the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier".
In the examination which I have been able to give to it today, it seems to me that it would meet the case which we are trying to deal with, which is not only that of the manufacturer but also that of the man who is deliberately ordering from a manufacturer for his own supply and, therefore, ought to be the person who gives the permission for loss leading, without at the same time allowing bogus organisations to be created by retailers to give the permission over the head of the supplier.
Having come to that conclusion, I should be happy to accept the Amendment put forward by my hon. Friend the Member for Shipley as an Amendment to my own Amendment to deal with this particular point. I think that it will put the assent in the hands of the manufacturer or the dealer who is ordering his own supplies from the manufacturer and exclude other organisations of the kind which have been described. I should, therefore, be prepared to accept that Amendment.
The Chairman: Do I take it that the first Amendment of the hon. Member for Shipley is to be withdrawn, by leave of the Committee?
Mr. Hirst: I beg to ask leave to withdraw the Amendment.
Amendment to the proposed Amendment, by leave, withdrawn.
Amendment to the proposed Amendment made: In line 15, leave out from "or" to end of the proposed Amendment and add:
"in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier".—[Mr. Hirst.]
Mr. Jay: I beg to move, as an Amendment to the proposed Amendment, after the words last added, to add:
Subject to the last-mentioned proviso, it shall be presumed, unless the contrary is proved, that where the goods are resold by the dealer at or below the price paid by him for those goods plus two per cent. if he is a wholesaler or five per cent. if he is a dealer other than a wholesaler the dealer has used the goods as loss leaders.
In this Amendment, we return to the main definition of what constitutes loss leading. The right hon. Gentleman started with a definition which depended on the retailer selling at cost or below. We never thought that that was satisfactory, and we originally put down an Amendment which would have altered that to bring in the factors of cost plus 5 per cent. in the case of the retailer and cost plus 2 per cent. in the case of the wholesaler. That, I agree, was not necessarily a perfect solution of the difficulty because, no doubt, it could be argued that the costs of the retailer would, in many cases, exceed 5 per cent. of the price at which he bought the goods and, therefore, he might still be selling at a loss to himself although he was selling at a price more than his cost price plus 5 per cent. Nevertheless, it clearly would have made the provision a little more effective than the extremely bald and quite ineffective form of words which the right hon. Gentleman first introduced.
The right hon. Gentleman has, however, now proposed, and the Committee has accepted, an Amendment which shifts the criterion of loss leading from any quantitative or statistical objective test and bases it entirely on the motives of the retailer. The motive which the retailer must have now is the motive of not selling for profit, whatever that means—which we still do not know—and, in addition, the purpose of attracting custom and advertising. This the Committee has accepted.
What we now propose is that there should be two criteria simultaneously, and that the criterion of cost plus 5 per cent, which we originally proposed should be added to the Bill alongside the test of motive which the right hon. Gentleman has proposed. The situation would be that, if it could be shown that the retailer was selling at less than
1160
cost plus 5 per cent., that would establish the case right away. It would then be a case of loss leadering. If he was not caught, so to speak, under that simple, objective test, then the right hon. Gentleman's more complicated and much more subjective test of proof of motive would come into effect.
The argument at this stage is that, if the right hon. Gentleman accepts our Amendment in addition to his own Amendment, then, at least in certain cases where it was, prima Jack, obvious that loss leadering was being indulged in, the whole complicated, subjective argument about the motive of the retailer which the manufacturer would be expected to prove would be short-circuited, so that the amount of argument and complications would thereby be reduced. Where this simple test did not apply, the Court would have to fall back on the argument of proof about the double motive of the retailer.
It seems to me that this would be a workable arrangement. Although perhaps, on the face of it, it increases complications, it really reduces them because, at any rate in some of the cases, the question at issue would be far simpler and much more objective. The general objective of the Committee is to prevent the real and undesirable cases of loss leadering which we discussed earlier, and we hope that the right hon. Gentleman will accept this Amendment in addition to his own criterion.
Mr. Heath: We have discussed this already to a certain extent because, when we were dealing with the main Amendment, I explained why we had changed the approach from that originally in Clause 3 to the one now accepted by the Committee. One of the main objectives of this was to achieve a flexibility in approach which would not contain the rigidity of the original formula of what would constitute the loss. I explained some of the details, particularly as far as small retailers are concerned.
What the right hon. Member for Battersea, North Mr. Jay) is now asking me to do is to take the original approach, to add a fixed mark-up for either wholesalers or retailers and combine it with the new approach which the Committee has just adopted. This would have all

1161
the disadvantages of which I have spoken. It would have the disadvantage of rigidity of approach and this would act particularly against the interests of the small retailer because, if he were buying at a price which gave him very much smaller discounts than the larger purchaser, then the mark up would act more to his disadvantage than to the disadvantage of the larger purchaser.
The right hon. Gentleman is really trying to combine the original Clause 3 with the new approach of selling not for the purpose of making a profit. For that reason I think that his proposal is
unsatisfactory. We have now adopted an approach which gives greater flexibility and greater advantage to retailers of all sizes, and we should not now try to combine it with the original approach and introduce this automatic and more rigid formula, which would act to the disadvantage of the smaller retailer. I hope that the Committee will reject the Amendment.
Question put, That those words be there added to the proposed Amendment:—
The Committee divided: Ayes 144, Noes 215.

Division No. 63.]

AYES

[10.59 p.m.

Abse, Leo

Griffiths, David (Rother Valley)

Oliver, G. H.

Ainsley, William

Hale, Leslie (Oldham, W.)

O'Mailey, B. K.

Allaun, Frank (Salford, E.)

Hannan, William

Oram, A. E.

Barnett, Guy

Harper, Joseph

Owen, Will

Baxter, Sir Beverley (Southgate)

Hart, Mrs. Judith

Paget, R. T.

Beaney, Alan

Hayman, F. H.

Parker, John

Bellenger, Rt. Hon. F. J.

Herbison, Miss Margaret

Pavitt, Laurence

Bence, Cyrl

Hill, J. (Midlothian)

Peart, Frederick

Benn, Anthony Wedgwood

Holman, Percy

Pentland, Norman

Bennett, J. (Glasgow, Bridgeton)

Houghton, Douglas

Prentice, R. E.

Blackburn, F.

Howell, Charles A. (Perry Barr)

Price, J. T. (Westhoughton)

Blyton, William

Howell, Denis (Small Heath)

Probert, Arthur

Bottomley, Rt. Hon. A. G.

Howie, W.

Randall, Harry

Bowden, Rt. Hn. H. W. (Leics, S.W.)

Hoy, James H.

Redhead, E. C.

Bowles, Frank

Hughes, Cledwyn (Anglesey)

Rees, Merlyn (Leeds, S.)

Braddock, Mrs. E. M.

Hughes, Emrys (S. Ayrshire)

Roberts, Albert (Normanton)

Broughton, Dr. A. D. D.

Hughes, Hector (Aberdeen, N.)

Robertson, John (Paisley)

Callaghan, James

Hynd, John (Attercliffe)

Robinson, Kenneth (St. Pancras, N.)

Carmichael, Neil

Irvine, A. J. (Edge Hill)

Rodgers, W. T. (Stockton)

Castle, Mrs. Barbara

Irving, Sydney (Dartford)

Rogers, G. H. R. (Kensington, N.)

Cliffe, Michael

Janner, Sir Barnett

Ross, William

Corbet, Mrs. Freda

Jay, Rt. Hon. Douglas

Silverman, Julius (Aston)

Craddock, George (Bradford, S.)

Johnson, Carol (Lewisham, S.)

Silverman, Sydney (Nelson)

Crosland, Anthony

Jones, Dan (Burnley)

Slater, Mrs. Harriet (Stoke, N.)

Crossman, R. H. S.

Jones, Elwyn (West Ham, S.)

Slater, Joseph (Sedgefield)

Cullen, Mrs. Alice

Jones, T. W. (Merioneth)

Small, William

Dalyell, Tam

Kelley, Richard

Sorensen, R. W.

Davies, G. Elfed (Rhondda, E.)

Lawson, George

Spriggs, Leslie

Dempsey, James

Lever, L. M. (Ardwick)

Stonehouse, John

Diamond, John

Lewis, Arthur (West Ham, N.)

Stones, William

Dodds, Norman

Loughlin, Charles

Strauss, Rt. Hon. G. R. (Vauxhall)

Donnelly, Desmond

Mabon, Dr. J. Dickson

Swingler, Stephen

Driberg, Tom

McBride, N.

Taylor, Bernard (Mansfield)

Duffy, A. E. P. (Colne Valley)

McCann, J.

Thomas, Iorwerth (Rhondda, W.)

Edelman, Maurice

MacColl, James

Thompson, Dr. Alan (Dunfermline)

Edwards, Rt. Hon. Ness (Caerphilly)

MacDermot, Niall

Thornton, Ernest

Evans, Albert

McInnes, James

Wainwright, Edwin

Fernyhough, E.

MacPherson, Malcolm

Watkins, Tudor

Finch, Harold

Mallalieu, E. L. (Brigg)

Wells, William (Walsall, N.)

Fitch, Alan

Manuel, Archie

Whitlock, William

Foot, Dingle (Ipswich)

Mapp, Charles

Wilkins, W. A.

Foot, Michael (Ebbw Vale)

Marsh, Richard

Wilson, Rt. Hon. Harold (Huyton)

Forman, J. C.

Mendelson, J. J.

Winterbottom, R. E.

Fraser, Thomas (Hamilton)

Millan, Bruce

Woof, Robert

Galpern, Sir Myer

Milne, Edward

Wyatt, Woodrow

George, Lady Megan Lloyd (Crmrthn)

Mitchison, G. R.

Yates, Victor (Ladywood)

Ginsburg, David

Morris, Charles (Openshaw)

Gordon Walker, Rt. Hon. P. C.

Mulley, Frederick

TELLERS FOR THE AYES:

Gourlay, Harry

Neal, Harold

Mr. Grey and Mr. Ifor Davies.

NOES

Agnew, Sir Peter

Barter, John

Bishop, Sir Patrick

Allason, James

Batsford, Brian

Black, Sir Cyril

Amery, Rt. Hon. Julian

Bevins, Rt. Hon. Reginald

Bourne-Arton, A.

Atkins, Humphrey

Biffen, John

Bowen, Roderic (Cardigan)

Awdry, Daniel (Chippenham)

Blngham, R. M.

Box, Donald

Barber, Rt. Hon. Anthony

Birch, Rt. Hon. Nigel

Boyd-Carpenter, Rt. Hon. John

Boyle, Rt. Hon. Sir Edward

Hill, J. E. B. (S. Norfolk)

Peel, John

Braine, Bernard

Hirst, Geoffrey

Percival, Ian

Brewis, John

Hobson, Rt. Hon. Sir John

Peyton, John

Brown, Alan (Tottenham)

Hooking, Philip N.

Pickthorn, Sir Kenneth

Bryan, Paul

Hogg, Rt. Hon. Quintin

Pike, Miss Mervyn

Buck, Antony

Holland, Philip

Pitman, Sir James

Bullard, Denys

Holt, Arthur

Pitt, Dame Edith

Camphell, Gordon

Hopkins, Alan

Pounder, Rafton

Carr, Rt. Hon. Robert (Mitcham)

Hornby, R. P.

Powell, Rt. Hon. J. Enoch

Chataway, Christopher

Hornsby-Smith, Rt. Hon. Dame P.

Price, David (Eastleigh)

Chichester-Clark, R.

Howard, Hon. G. R. (St. Ives)

Prior, J. M. L.

Clark, Henry (Antrim, N.)

Hughes Hallett, Vice-Admiral John

Prior-Palmer, Brig. Sir Otho

Clark, William (Nottingham, S.)

Hughes-Young, Michael

Proudfoot, Wilfred

Cleaver, Leonard

Iremonger, T. L.

Quennell, Miss J. M.

Cole, Norman

Irvine, Bryant Godman (Rye)

Ramsden, Rt. Hon. James

Cooke, Robert

James, David

Rawlinson, Rt. Hon. Sir Peter

Corfield, F. V.

Johnson, Eric (Blackley)

Redmayne, Rt. Hon. Martin

Costain, A. P.

Johnson smith, Geoffrey

Rees, Hugh (Swansea, W.)

Coulson, Michael

Jones, Arthur (Northants, S.)

Renton, Rt. Hon. David

Critchley, Julian

Joseph, Rt. Hon. Sir Keith

Ridley, Hon. Nicholas

Crowder, F. P.

Kaberry, Sir Donald

Ridsdale, Julian

Dalkeith Earl of

Kerans, Cdr. J. S.

Rippon, Rt. Hon. Geoffrey

Dance, James

Kershaw, Anthony

Roots, William

d'Avigdor-Goldsmid, Sir Henry

Kirk, Peter

Russell, Sir Ronald

Deedes, Rt. Hon. W. F.

Kitson, Timothy

Scott-Hopkins, James

Donaldson, Cmdr. C. E. M.

Lancaster, Col. C. G.

Sharples, Richard

Douglas-Home, Rt. Hon. Sir Alec

Legge-Bourke, Sir Harry

Shaw, M.

Drayson, G. B.

Lindsay, Sir Martin

Shepherd, William

du Cann, Edward

Linstead, Sir Hugh

Skeet, T. H. H.

Duncan, Sir James

Litchfield, Capt. John

Smith, Dudley (Br'ntf'd & Chiswick)

Eden, Sir John

Lloyd, Rt. Hon. Selwyn (Wirral)

Spearman, Sir Alexander

Elliott, R. W. (Newc'tle-upon-Tyne, N.)

Longbottom, Charles

Stainton, Keith

Emery, Peter

Longden, Gilbert

Stanley, Hon. Richard

Erroll, Rt. Hon. F. J.

Loveys, Walter H.

Stevens, Geoffrey

Farr, John

Lucas-Tooth, Sir Hugh

Stodart, J. A.

Fell, Anthony

McAdden, Sir Stephen

Stoddart-Scott, Col. Sir Malcolm

Fisher, Nigel

MacArthur, Ian

Taylor, Frank (M'ch'st'r, Moss Side)

Fletcher-Cooke, Charles

McLaren, Martin

Thatcher, Mrs. Margaret

Fraser, Rt. Hn. Hugh (Stafford&Stone)

Maclean, Sir Fitzroy (Bute & N. Ayrs.)

Thompson, Sir Richard (Croydon, S.)

Fraser, Ian (Plymouth, Sutton)

McLean, Neil (Inverness)

Thorneycroft, Rt. Hon. Peter

Freeth, Denzil

Macmillan, Maurice (Halifax)

Tiley, Arthur (Bradford, W.)

Galbraith, Hon. T. G. D.

Maddan, Martin

Tilney, John (Wavertree)

Gammans, Lady

Maginnis, John E.

Turner, Colin

Gardner, Edward

Marples, Rt. Hon. Ernest

Turton, Rt. Hon. R. H.

Gibson-Watt, David

Marten, Neil

Tweedsmuir, Lady

Gilmour, Sir John (East Fife)

Mathew, Robert (Honiton)

van Straubenzee, W. R.

Glover, Sir Douglas

Matthews, Gordon (Meriden)

Vane, W. M. F.

Glyn, Dr. Alan (Clapham)

Maude, Angus (Stratford-on-Avon)

Vickers, Miss Joan

Godber, Rt. Hon. J. B.

Maudling, Rt. Hon. Reginald

Walker, Peter

Goodhart, Philip

Mawby, Ray

Walker-Smith, Rt. Hon. Sir Derek

Goodhew, Victor

Maxwell-Hyslop, R. J.

Ward, Dame Irene

Gough, Frederick

Maydon, Lt.-Cmdr. S. L. C.

Watkinson, Rt. Hon. Harold

Gower, Raymond

Mills, Stratton

Webster, David

Grant-Ferris, R.

Miscamphell, Norman

Wells, John (Maidstone)

Green, Alan

Montgomery, Fergus

Whitelaw, William

Grosvenor, Lord Robert

More, Jasper (Ludlow)

Williams, Dudley (Exeter)

Hamilton, Michael (Wellingborough)

Morgan, William

Williams, Paul (Sunderland, S.)

Harrison, Col. Sir Harwood (Eye)

Mott-Radclyffe, Sir Charles

Wilson, Geoffrey (Truro)

Harvey, Sir Arthur Vere (Macclesf'd)

Neave, Airey

Wise, A. R.

Harvey, John (Walthamstow, E.)

Nicholls, Sir Harmar

Wolrige-Gordon, Patrick

Harvie Anderson, Miss

Noble, Rt. Hon. Michael

Wood, Rt. Hon. Richard

Hay, John

Nugent, Rt. Hon. Sir Richard

Woodhouse, C. M.

Heald, Rt. Hon. Sir Lionel

Orr-Ewing, Sir Ian (Hendon, North)

Woodnutt, Mark

Heath, Rt. Hon. Edward

Page, John (Harrow, West)

Worsley, Marcus

Hendry, Forbes

Page, Graham (Crosby)

Hitey, Joseph

Pannell, Norman (Kirkdale)

TELLERS FOR THE NOES:

Hill, Mrs. Eveline (Wythenshawe)

Pearson, Frank (Clitheroe)

Mr. Finlay and Mr. Pym.

Proposed words, as amended, there added.
Mr. Gresham Cooke: I beg to move, Amendment No. 45, in page 3, line 38, at the end to add
(3) For the purposes of this section two or more dealers being interconnected bodies corporate (within the meaning of the Restrictive Trade Practices Act 1956 shall be treated as a single dealer.
The Deputy-Chairman (Sir Robert Grimston): I think that with that Amendment we might discuss Amendment No. 172, in Clause 11, page 8, line 35, leave out subsection (2).
Mr. Gresham Cooke: This is one of the few Amendments in respect of which I have not the support of the hon. Member for Ebbw Vale (Mr. M. Foot), the

1165
hon. Member for Nelson and Colne (Mr. S. Silverman), and other hon. Members. Previously, when I have put down Amendments late at night, the names of the hon. Members have appeared in support of those Amendments the next day—but not on this occasion.
The Amendment is necessary because of the appearance on the Notice Paper of Amendment No. 172. I have no doubt that my hon. Friend the Member for Shipley (Mr. Hirst) will explain the purpose of that Amendment when we reach it. If Clause 11(2) remains in the Bill, the Board of Trade will be able to obtain an injunction against a whole group of suppliers, and will not have to obtain separate ones in respect of every branch. If that subsection is deleted, however, a new situation arises, in which a chain store might operate a series of branches by turning them into limited liability companies, each of which, being a separate company, could manipulate its own prices and introduce loss leaders, and have to be pursued separately by the supplier. He could withhold supplies only from one limited liability company.
My Amendment would give a definite power to the supplier to withhold his supplies from a whole group if there were to be loss leadering by any one branch in that group. It would prevent the movement of loss leaders from one branch to another round the group. I think that this is a reasonable provision. It is necessary that suppliers should have the power to act against a group, otherwise they would be in a very difficult position. They would have to go from one branch to another—perhaps round 100 branches. It would be an intolerable position.
A supplier could not get a legal injunction; he could not get damages. He would merely have the power to withhold supplies, and that would be a piffling power if he were a small supplier and was up against a large chain of retailers. Therefore, I submit that this provision should be written into the Bill, so that a supplier can act against a whole group. I hope that my right hon. and learned Friend will be able to give the Committee an assurance that it is the intention of the Clause to operate in this way.
Mr. W. Wells: I need say no more than two sentences about the Amendment. It seems a useful one, designed to make more genuine the restrictions on loss leadering, against which the Clause is directed. Because it seems to close an existing gap we shall certainly support it, and we hope that the Government will accept it.
The Attorney-General (Sir John Hobson):The Amendment is necessary only if the Amendment No. 172 is accepted. If that Amendment is not moved this one is wholly unnecessary. I was going to recommend the Committee to stand upon the basis that Clause 11(2) should not be amended, and that this Amendment is therefore unnecessary.
Mr. Hirst: I am in some difficulty. I did not rise before, because I thought it was reasonable to wait to hear my right hon. And learned Friend's explanation. I am not capable of moving my Amendment now, because it relates to Clause 11, which we have not yet reached.
11.15 p.m.
The Attorney-General: I understand that. We are discussing the two Amendments together, but we cannot vote on Amendment No. 172 until we reach Clause 11. The effect of this Amendment is to provide that two or more dealers who are interconnected bodies incorporated within the meaning of the 1956 Restrictive Trade Practices Act, that is to say companies who are members of the same group, should be treated as one dealer. Therefore a supplier, normally a manufacturer, would be entitled to withhold supplies on the grounds that another dealer in the same group had been loss leadering.
The Bill as drafted already contains precisely such a provision in Clause 11(2) although that Clause is dealing with the position of both dealers and suppliers and provides that both dealers and suppliers who are members of the same group shall be treated as interconnected companies and can be treated as a single supplier or single dealer.
The Amendment which my hon. Friend the Member for Shipley (Mr. Hirst) desires to move is to do the reverse, of course, in relation to suppliers. The combined effect of the two Amendments would be

1167
that two or more dealers who are members of one group would be treated as one dealer for the purpose of the loss leadering clause, but that two or more suppliers who are members of one group would not be treated as one supplier under Clause 2, which deals with the problem of withholding supplies.
It seems to me what is sauce for the goose is sauce for the gander. and it is plainly right both dealers and suppliers, if members of connected companies, should be treated as one group and the rules for withholding supplies and loss leadering should be applied in both directions throughout one group. One should not in one case divide the group into sections and in the other not divide it. If the Committee stands upon that basis this Amendment is unnecessary provided Clause 11(2) remains un-amended.
Mr. Hirst: I am very grateful to my right hon. and learned Friend the Attorney General for that advice. I do not think that it is very easy to follow this. It is a very complicated matter.
I have a note here of an instance that I was going to raise on discussing my Amendment to Clause 11, page 8, line 35, if I could have moved it. It is only one sentence and so complicated I do not understand it. Perhaps I can read it out so that it gets on the record, then my right hon. and learned Friend can perhaps read it later and tell me what it means, always provided that we have sufficient time between now and reaching Clause 11.
I am told rather great difficulty is in the construction. For example: if A and B are associated dealer companies and X and Y are associated supply companies and dealer A has within the previous six months indicated to supplier X he intends to cut X's resale prices, supplier Y shall be automatically presumed to be unlawfully withholding supplies from dealer B if he happens to refuse to supply them. There are, I am told wider ramifications. I do not propose to insist on a reply to that tonight.
Mr. Paget: It seems that the case when we get to Clause 11 will be one of considerable complexity. That being so, I feel sure that the Government would not wish to turn down the matter out of hand without having heard the
1168
argument. I therefore suggest that the Government give an undertaking that in the event of their eventually deciding to accept the Amendment in the name of the hon. Member for Shipley (Mr. Hirst) in Clause 11, they will introduce on Report the present Amendment of the hon. Member for Twickenham (Mr. Gresham Cooke). That would seem to overcome the difficulty and leave us and, indeed, the Government with full opportunity to consider the obviously serious and difficult Amendment to Clause 11.
The Attorney-General: It is plain that if, when we come to Clause 11, the Amendment which is to be moved by my hon. Friend the Member for Shipley (Mr. Hirst) were passed, carried, accepted or otherwise incorporated into the Bill dealing with suppliers, the question of dealers would have to be considered. I cannot at this stage undertake how it would be reconsidered, but it is plain that the problem would have to be reconsidered and dealt with on Report.
Mr. Gresham Cooke: I am in rather a quandary, because I am not sure whether Amendment No. 172 will be selected when we reach Clause 11. However, as my right hon. and learned Friend the Attorney-General has said that if it were successful the position would be looked at again on Report concerning my present Amendment, and on the understanding that my Amendment would be covered in that way, I beg to ask leave to withdraw the Amendment.
Mr. Paget: May we get this clear? It is clear, I take it, that in these circumstances there will be another opportunity on Clause 11 to discuss the Amendment of the hon. Member for Shipley (Mr. Hirst), who will then be in a position to explain it fully, which he was not able to do tonight.
The Deputy-Chairman: I cannot, at this stage, commit the Chair about what will happen on Clause 11. Of course, note will be taken of what has passed now. Is it your pleasure that the Amendment be withdrawn?
Amendment, by leave, withdrawn.
Clause, as amended, ordered to stand part of the Bill.
Mr. Jay: I beg to move,
That the Chairman do report Progress and ask leave to sit again.

1169
We have made considerable progress this afternoon. The Secretary of State has shown himself rather more amenable to reason than on certain other occasions. We have confined ourselves today to the question of loss leaders, which is a subject in itself and one of considerable complication. We have now reached a point when even the hon. Member for Shipley (Mr. Hirst), on his own admission, is unable to understand his own notes. I do not suggest that he is the only hon. Member of the Committee who is in that condition at this hour of the night.
Mr. Hirst: It is merely a question of understanding the construction and interpretation of the case put to me. We have all been in that position at times.
Mr. Jay: I agree. I do not want to press the point too far. I merely adduce it as evidence that it would not be conducive to the most rational and thorough discussion of the Bill if we proceeded at this hour to a totally different subject.
Clause 4 deals with the quite separate subject of the motives on account of which a supplier might wish or be permitted to withold supplies. We have already had a taste on Clause 2 of how complicated and controversial this is. The initial Amendments that we would wish to move raise substantial points which should be argued at length. I do not think that the Committee is altogether in the mood or in a position to do justice to the Clause or to the Amendments tonight. As we have completed Clause 3, I very much hope that the right hon. Gentleman may accept the Motion.
Mr. Heath: As the right hon. Member for Battersea, North (Mr. Jay) has said, we have made progress today in achieving Clause 3 and dealing with the matter of loss leaders. I am sorry that the right hon. Gentleman feels that he is not able, at this stage, to make a rational approach to the difficult problems of Clause 4, but I have some sympathy with him and, therefore, I think that it might be wiser to accept the Motion and to make progress next time.
Question put and agreed to.
Committee report Progress; to sit again Tomorrow.

EMPLOYMENT (FORD'S, DAGENHAM)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Finlay.]
11.25 p.m.
Mr. John Parker: Three and a half years ago the American Ford Company obtained control of 100 per cent. of the shares in the British Ford Company. Previously, it had been in possession of only 54·6 per cent. of its shares.
On the 21st November, 1960, the Leader of the House, then Chancellor of the Exchequer, made a statement to the House that the Government had given their consent to the American purchase of the British-owned shares in the British company. The main argument he advanced in favour of the Government's action in giving that consent was that if 100 per cent. of the shares in the British-owned company were owned by the American company the American company would be more disposed to expand and develop the British company than if it did not have such a large holding in the British company, particularly as the German Ford Company had 100 per cent. American ownership of its shares.
In the subsequent debate, the Leader of the House said:
"the intention is that Ford's in the United Kingdom should become bigger than all the other activities of Ford's outside the United States put together. That gives the Ford Company of the United States a very big incentive to maintain and increase the value of its British undertaking."—[OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 829.]
Later in the debate which took place later that day, the right hon. and learned Gentleman said:
"I have also received assurances on the following matters. I was told that the programme already announced of expansion on Merseyside, al Basildon in Essex, and elsewhere, involving an expenditure estimated at £70 million, would go forward. The United Kingdom Company has always ploughed back a high proportion of its profits for future development and that policy would continue. I was assured that there would be continuity in management and employment policies. The majority of the members of the Board would continue to le British.… There would be no change in employment policy and no intention to tale control of that policy out of the hands of the Board of the United Kingdom

1171
company. The United Kingdom company already obtains nearly 100 per cent. of the components in the United Kingdom. That policy would continue and full American ownership would indeed put the United Kingdom company in a better position to compete in world markets for the sale of components made here."—[OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 769–70.]
My case is that these undertakings have not been honoured. In a speech I made in that debate I explained that there was great disquiet in Dagenham at the prospect of 100 per cent. American ownership of the shares in the British company. I said:
"There is a feeling that whatever the terms may have been made there are no sanctions to see that they are carried out."
Later, I added:
"There is a strong feeling that with increase of American control there will be more Americanisation of methods of handling labour and an increase in the bad relations which have been responsible for so much of the trouble that has taken place from time to time in Ford's." [OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 856–7.]
Unfortunately, these fears have been justified by events. Employment policy in the last three and a half years has been 100 per cent. Americanised. There has been an increase in the number of Americans employed in the British company. I am told that at present about 100 to 150 Americans are now employed in the administrative, technical and advisory positions in the British firm. There has been an increase in dictation in the matter of policy from Detroit. The result has been that there is no room for chargehands on British lines in the firm and they have had to go. The position of old employees has altered.
In the past it was assumed that if a man had a good employment record with the company and his health then deteriorated, a job might be found for him as a cleaner, doorkeeper, or something of that kind; but now, he is immediately pushed out at once if it is found that he is not 100 per cent. fit. Further-more, the "green card" system does not work satisfactorily because, for example, if a man with a hernia has an operation and then recovers, he is given a green card although now 100 per cent. fit; our disability laws are thus got round in a way which is an abuse of the law.
American advice and specifications frequently cut right across the provisions of the British Factory Acts. There is
1172
continual pressure from Detroit to ignore the law of this country and there is a continuing need for our Factory Inspectorate to see that the law is enforced. Furthermore, the American policy of "hire-and-fire" is ruthlessly enforced. That may go down well with American labour, but it is not liked in this country, where men feel the need for security of employment. With our long history of industry there is felt to be a primary need for security, but the present policy at Ford's does not give that and this lack of a sense of security is causing very great disquiet at present.
The whole labour policy at Ford's is hopelessly confused. This appears to result from some conflict between Detroit and Dagenham. One must ask "How silly can Ford's get in their labour policy?" Simultaneously, with talk of redundancy due to a forthcoming rearrangement of work between Dagenham, Hailwood, and Basildon, there is a demand for more overtime to be worked despite the large turnover of staff, and natural wastage. With this demand for more and regular overtime, there is a refusal of longer summer holidays. There is also an increasing tendency for Ford's to place out work on contract instead of doing it in the firm. These various policies have created a fantastically bad labour image for Ford's.
I would like to know whether it is true that work on a new tractor is to be transferred to Antwerp despite undertakings which were given at the time that the Americans took over 100 per cent. control at Dagenham that nothing of that kind would happen. In the matter of the supply of components, I would like to refer to the promise given to the former Member for Lincoln, Sir Geoffrey de Freitas, in November, 1960, when the then Chancellor of the Exchequer said:
"…the purchase and manufacture of components in the United Kingdom will continue as at present, which means nearly 100 per cent. of the components used".—[OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 830.]
I am told that a large number of components are increasingly obtained from abroad.
My complaint is that Ford's are not honouring the undertakings given by them when the Government gave permission for the Americans to purchase the British owned shares. I ask the

1173
Government to press the firm to carry out the undertakings that it originally gave.
11.34 p.m.
Mr. Tom Driberg: I should like, in the few minutes at my disposal, to support very strongly what my hon. Friend the Member for Dagenham (Mr. Parker) has just said, since a large number of my constituents also work at Ford's. I would follow his example in taking the House back to that debate on 21st November, 1960, and hope that the Parliamentary Secretary who is to reply tonight has got HANSARD with him.
We were than repeatedly given the assurance by two senior members of the Government—the former Chancellor of the Exchequer and the President of the Board of Trade—who have now moved to other positions in the Government, but who held those positions at that time. Both of them most emphatically gave this undertaking to which my hon. Friend has referred.
As the Chancellor put it:
"I was assured that there would be continuity in management and employment policies.… There would be no change in employment policy.…" —[OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 770.]
And the President of the Board of Trade said very much the same thing. I take it that they must have been rather easily convinced in the preliminary inquiries they made, and which my right hon. Friend the present Leader of the Opposition described in his speech in that debate, as the "most perfunctory inquiries".
This is, after all, a rather serious matter for Parliament. It is, of course, in one sense, an industrial matter of a kind which is very often thought to be outside the purview of this House, but, on the other hand, as, clearly, a very great national interest was involved here, it was right that the Government should have made the statement which was made and should have taken part in the debate, in which my hon. Friend and I also took part. But, unfortunately, it is not only a question of Ford's having clearly misled the Government during those perfunctory preliminary inquiries. It is also a question of the
1174
Government having misled the House. I do not say they did so deliberately. They did so because they did not bother to go into the matter and really get cast-iron assurances in advance.
As my hon. Friend said, there has been since then an intensive Americanisation in Ford's of Dagenham, Americanisation of methods. In everything from accountancy onwards there has been radical and drastic change, and not always by any means for the better. A large number of American personnel have been brought in, so that the dissatisfaction is not felt only by the workers on the shopfloor; it is also felt at various levels in management as well, amongstexecutives.
I want to leave plenty of time for the Minister's reply, so I will close simply by quoting one short passage from a letter which seems to me to prove beyond doubt that when we were told that there would be no change in employment policy, and that this would remain under the control of the British company, we were misled: we were told a falsehood. This is a letter referring to quite a small detail of employment policy, a decision by the company to transfer part of an operation from hourly paid to salaried staff status. The letter comes from the manager of the industrial relations engineering staff at Aveley to the organising secretary of the trade union concerned, who had made inquiries. The letter brusquely brushes off the inquiry and says it has nothing to do with the trade union, and then explains that there has been some delay in arranging for this change of status.
He writes that
"the transfer of this operation to salaried staff involves a succession of essential procedural stages, including final ratification by the American Company of the changes to budgeted headcount involved. Complications at this latter stage have been the sole cause of the recent delay in obtaining final approvals, but all concerned were told at the outset that it would be impossible to predict with certainty how soon this stage could be accomplished. This final stage has now been cleared."
That final stage, as the letter shows, was the final ratification by the American company of this relatively quite small detail in employment policy. If that is not employment policy, I hope that the hon. Gentleman will tell us what the phrase means.
11.40 p.m.
The Parliamentary Secretary to the Ministry of Labour (Mr. William Whitelaw): The hon. Member for Dagenham (Mr. Parker) and the hon. Member for Barking (Mr. Driberg) have raised a subject of very great importance to their constituents. There can be no doubt of the immense contribution which the Ford Motor Company at Dagenham makes to the prosperity of the surrounding area. The general employment position in the Dagenham area is very good. There is no short-time working in the area and nor do we know of any future redundancies. Indeed, there is a general shortage of labour in the employment exchange areas around Dagenham—as in the Greater London area as a whole.
We should, also, not forget that the activities of the Ford Motor Company in Britain are not confined to the Dagenham area. A large factory is being developed at Halewood, near Liverpool, and the company has other establishments at Southampton, Leamington, Langley and many other places.
Both hon. Members opposite have suggested that the assurances on employment policy which were given in November, 1960, to my right hon. and learned Friend the Lord Privy Seal, then Chancellor of the Exchequer, have not been fully kept. It is important when considering this matter to be quite clear as to what these assurances were. I will, therefore, read two extracts from the OFFICIAL REPORT of November, 1960, which set out the position plainly.
The first, which was also quoted by the hon. Member for Dagenham, was a statement made by my right hon. Friend the Lord Privy Seal, who said:
"There would be no change in employment policy and no intention to take control of that policy out of the hands of the Board of the United Kingdom company. The United Kingdom company already obtains nearly 100 per cent. of the components in the United Kingdom. That policy would continue and full American ownership would indeed put the United Kingdom company in a better position to compete in world markets for the sale of components made here."
The second quotation of importance is from the speech of my right hon. Friend the Chancellor of the Exchequer, who was then the President of the Board of
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Trade. He said, in reply to an intervention by the hon. Member for Barking:
"I said at the beginning of my speech that no company can ever give an assurance about the level of employment because it depends on ability to sell its products in a competitive market. There is a great difference between employment level and employment policy. Clearly, it means employment policy and not employment level."—[OFFICIAL. REPORT, 21st November, 1960; Vol. 630, c. 770–904.]
I shall, therefore, deal with both of these matters; with both the question of what might be described in this context as employment policy and with the position of the employment level, along with the related matters to which the hon. Member for Dagenham referred.
First, employment policy. It would be fair to say, in the context of my right hon. Friend's statement, that employment policy clearly refers to the formation and application of the conditions of work which form the contract of service. On this, I have received a categorical assurance from the Ford Motor Company. It states:
"The employment policy of the United Kingdom Ford Company is still entirely within the control of the British Board of Directors—in line with the statement by the Chancellor of the Exchequer in 1960."
That is a categorical assurance which I have been given and which I am authorised to give to the House tonight.
Mr. Driberg: Does the hon. Gentleman believe it?
Mr. Whitelaw: Naturally, I believe what I am given in a categorical assurance, but I also have some facts to support it.
I am further told that in May, 1961, the trade unions represented on the company's National Joint Negotiating Committee were given an assurance that they would still be able to negotiate with the firm on the understanding that the British directors were their own masters and that the sale of shares in no way affected the existence, status or functions of the National Joint Negotiating Committee. That position has not altered. It is fair to read into this categorical assurance that the Ford Motor Company has every intention of standing by the undertakings which it gave in 1960 on employment policy.
I should like, at this stage, to refer to what the hon. Member for Dagenham said about questions of safety,

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health and welfare and about the Factory Inspectorate. I assure him that the Factory Inspectorate are most careful to ensure that the Factory Acts are properly observed in our factories, and I give him the assurance that they naturally pay attention to this at Dagenham as, indeed, everywhere else.
There is no doubt from what the hon. Members have said that they are also concerned with the somewhat separate question of employment levels at Dagenham and, therefore, I can do no better than give them some of the figures. The total number of Ford's employees in the country as a whole in November, 1960, was 54,310. In February this year, it was 60,578, an increase of over 6,000. At Dagenham, the number of employees in November, 1960, was 39,223 whereas in February of this year it was 37,959. The decrease of over 1,000 at Dagenham is explained by the policy of dispersing production to other parts of the country. In the three years in question employment at Halewood, for example, has grown to 8,226, to the great benefit of Merseyside, a development district where more jobs were badly needed.
An indication that the firm is planning for the future is also given by the figures of the number of apprentices it trains. That number has increased from 738 in 1960 to 930 this year. The sales figures might also interest the House as they show that the level of Ford's activity in the United Kingdom has increased considerably in the last few years. The value of the sales of Ford's of the United Kingdom increased from £268 million in 1960 to £347 million in 1963. Included in that is a most important contribution to the nation's export trade.
As for the future, I understand that in the long term the firm has no fears of any decline in the level of employment. In fact its forecasts indicate that over the next 10 years there is more likely to be an increase in its total strength in this country. There may well be fluctuations, however, from time to time in different localities or on different components, depending on changes in demand for various products.
The hon. Member for Dagenham questioned the assurance about components. The assurance, as he said, was
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quoted by my right hon. and learned Friend, who was then Chancellor of the Exchequer, that
"The United Kingdom company already obtains nearly 100 per cent. of the components in the United Kingdom. That policy would continue …"—[OFFICIAL REPORT, 21st November, 1960; Vol. 630, c. 770.]
I am assured that that policy has continued and that nearly 100 per cent. of the components are still produced in the United Kingdom.
There is then the question of the British directors on the board, which also is relevant. The position is that there are 11 British directors on the United Kingdom board and four American. All seven of the executive directors and four of the non-executive directors are, in fact, British.
The hon. Member for Dagenham raised the question of the manufacture of tractors in Antwerp. In pursuance of the assurances which had been given, Sir Patrick Hennessy, then the chairman of the company, sent a letter in October, 1962, to my right hon. and learned Friend the then Chancellor of the Exchequer explaining the company's forward plans for tractor manufacture. He said that the new factory at Basildon, Essex, would manufacture tractor engines, hydraulics and front ends and assemble all tractors for world markets except North America and certain European countries. He said that the existing Ford factory in Antwerp would operate as a branch of Ford Motor Company in this country and would manufacture tractor transmissions and rear axles, using castings and forgings imported front the United Kingdom, and assemble tractors for certain European countries.
I think that hon. Members will agree that the figures I have given are satisfactory and show that, since November, 1960, the Ford Motor Company has increased its already very substantial contribution to the British economy. Taken together with the renewed undertaking on employment policy which I have quoted, they should reassure both hon. Gentlemen and those of their constituents who have expressed anxieties to them.
Mr. Driberg: How does the hon. Gentleman square that new assurance

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with the passage in the letter saying that even a quite small change had to have final ratification in America?
Mr. Whitelaw: The hon. Gentleman will be the first to appreciate that, when this matter was raised, I sought from the Ford Motor Company the assurance which I have been given. What the hon. Gentleman has said on a particular detail of employment policy will, no
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doubt, be noted by the company. I think that it is right that I should confine myself to the sphere of our responsibility and give the categorical assurance which has been given to me by the Ford Motor Company.
Question put and agreed to.
Adjourned accordingly at seven minutes to Twelve o'clock.