RESALE PRICES BILL

HC Deb 10 March 1964 vol 691 cc255-379

Order for Second Reading read.

Mr. Speaker

Before I call the Minister it might be convenient to indicate the position about the selection of Amendments. The Amendment in the name of the hon. Member for Rugby (Mr. Wise) and other hon. Members is selected: That the Bill be read a second time upon this day six months. The Amendment in the name of the hon. Member for Ilford, North (Mr. Iremonger) is not selected: That this House declines to give a Second Reading to a Bill which may threaten the livelihood of many small independent traders without attempting at the same time to deal with restrictive practices by large commercial monopolistic organisations and trade unions, which have a far more profound effect on the national economy.

3.41 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, That the Bill be now read a Second time.

The purpose of the Bill is to prohibit the practice of resale price maintenance except where exemption has been granted by the Restrictive Practices Court. I hope that it will be convenient to the House to give something of the background to this Bill before coming to its exact provisions. I begin by putting the Bill into its proper perspective. It is one element, and an important element, in a comprehensive policy.

The object of this policy is to promote more competition throughout the economy. If we are to obtain a sustained and steady rate of growth, undoubtedly we must make the most efficient use of all our resources. This, in my view and the view of the Government, can best be obtained by increasing competition over a wide field. This is why it is essential now, at a time of expanding economy where the level of incomes is all-important and where industry should be cost-conscious, that prices need to be kept down. That is why, in my statement in the House on 15th January, I made it clear that our proposals go much wider than the present Bill. They cover the whole field of monopolies, mergers and restrictive practices in addition to resale price maintenance.

This is not a new element in the Government's approach. The various steps we are taking and planning follow on from the Restrictive Trade Practices Act, 1956, and they derive from the experience which we have had of it. The White Paper which was published last Thursday on these matters set out the Government's policy. Undoubtedly, there will be an opportunity, if the House so requires, to debate these matters at length. I do not therefore propose to deal with them today, except to say that there has been some comparison between the Bill and the proposals in the White Paper. Indeed, an Amendment on the Order Paper refers to that.

I emphasise to the House that the proposals in the White Paper are of major importance. The Government intend to ask Parliament for powers to strengthen the Monopolies Commission by the appointment of a registrar, increasing its size and widening its scope to include the investigation of mergers and commercial services. That is a major step. Secondly, we shall ask for power to give effect to all the recommendations of the Monopolies Commission where we decide that it is right so to do, even to the point of calling upon a monopoly to divest itself of interests. Finally, we would ask Parliament to approve proposals for making the 1956 Restrictive Trade Practices Act more effective.

These are major measures covering the whole field of monopoly, mergers and restrictive practices for which the Government will be asking considerable powers coupled with parliamentay safeguards. I hope, therefore, that the right hon. Member for Battersea, North (Mr. Jay), who, I understand, is to follow me, will not in any way underestimate the importance of the measures which are put forward in the White Paper. In scale, these measures and the powers required are very substantially greater than the action which is being taken by the Bill.

Mrs. Barbara Castle (Blackburn) rose——

Mr. Heath

Perhaps I may be allowed to set out the matter generally.

All these measures, taken together, add to a further attack on a wide front on restrictions which stifle competition. We believe that they are necessary in the struggle to maintain stability of prices together with a high level of employment in an expanding economy. It is, of course, true that legislation alone cannot produce competition, but it can create conditions in which it is much more difficult for obstacles to competition to survive. Such legislation is now recognised as an essential element in present-day economic policy.

Mrs. Castle

The right hon. Gentleman has said something very important. Are we to understand from what he has said that the legislation against monopolies is to be introduced before the General Election?

Mr. Heath

The legislation is now being prepared and will be introduced by this Government directly after the General Election.

I hope that the influence of the changes we are proposing will spread far beyond their legal scope. They should help to change the whole climate of our economic life and enable us to get away from the atmosphere in industry and commerce in which sometimes keen competition is thought to be hardly respectable. The consumer and the nation can pay a heavy price for comfortable devices which raise industrial costs. We intend to create a much sharper and more bracing environment.

The number of people employed today in distributive processes is growing faster than the number in manufacturing industry. We are now making great demands upon our industry. It is only right that we should also look to the distributive services for a similar response. It is just as essential to have increasing productivity and a high degree of efficiency in distribution as it is in production.

I turn now to the nature of resale price maintenance. This is a complex subject on which there has been a great deal of debate and concern for many years. Let me, first, define it. It is a practice whereby a manufacturer determines the price at which the wholesaler or retailer, or both, sells his goods. The manufacturer determines the price at which that happens. This means that, however efficient he is, a shopkeeper, large or small, cannot pass on the results of his efficiency to the consumer by a reduction in price. It follows that there is no incentive to be efficient in this form. It means that there is less pressure on manufacturers to be more competitive and I to reduce their prices.

I shall now deal with its scale. The National Institute of Economic and Social Research recorded that, in 1938, very approximately 30 per cent. of consumer expenditure on goods went on price-maintained articles. Today, the best estimate we can make is that it covers about 40 per cent. of consumer expenditure on goods, perhaps as much as £5,000 million every year. Resale price maintenance is practised by most manufacturers of branded goods outside the food trades. I have seen a number of suggestions that there is no need for Government action because the resale price maintenance system was already disintegrating. In fact, our evidence is that the system is still firmly entrenched.

In recent years it has broken down completely in foods and groceries. Despite this, the proportion spent on price-maintained goods is higher today than it was before the war. I take an example of its operation. There may be two distributors in the chain between the manufacturer and the retailer, but the manufacturer may fix the ceiling price of his goods at each stage of distribution.

Of course, he is fixing, at the same time, the margin which each distributor is allowed to retain; thus all retailers will charge the same price for that manufacturer's goods and so the result is precisely the same as a price-fixing agreement between the retailers. In other words, all price competition is ruled out.

I would like to make one point plain. This, of course, is quite different from the question of the prices which a manufacturer may himself charge for his products when he himself sells them. The price at which the manufacturer sells his goods is something quite separate and we are not, in this legislation, attempting to determine this in any way. That must be left to the forces of competition and the manufacturer's own judgment. [Interruption.] I do not know whether hon. Gentlemen opposite have misunderstood what I am saying, or whether they have in mind the thought that there should be strict control for every item a manufacturer sells.

I am saying that the first price at which the manufacturer sells he fixes for himself. Nor are we in any way removing a manufacturer's right to fix maximum prices, if he so desires. Similarly, however, we think it right that a retailer should, in general, have the right to decide what price he should charge to his customer, and, certainly, the customer should not be required to pay a retailer more for his services than that retailer thinks necessary.

A number of inquiries have been held as a result of the concern expressed on this matter by Governments in this and other countries and it might be of help to hon. Members if I mention some of the facts. First, there is the Report of the Lloyd Jacob Committee, in 1949—and it must be remembered that that Committee met at a time of scarcity and shortage and, perhaps, its thoughts were coloured by that. Collective enforcement of resale price maintenance was then a normal and lawful commercial practice. It was condemned in unqualified terms by that Committee and the Restrictive Trade Practices Act. 1956, which was introduced by my right hon. Friend who is now Minister of Defence, made collective enforcement unlawful.

It has been suggested that the Lloyd Jacob Committee's conclusions on individual resale price maintenance endorse the arguments of those who are opposed to legislation on the lines of this Bill. I suggest to the House that that is not so. The Lloyd Jacob Committee certainly concluded that if collective enforcement were banned, individual manufacturers could be left free to enforce resale prices for their own branded goods, but this was because they also believed—and this is important and I will quote from the Report—that it would be feasible to devise safeguards to ensure that individual resale price maintenance did not …obstruct the development of particular methods of trading…impede the distribution by another manufacturer of competitive goods or…deprive the public of the benefits of improvements in distribution. Public policy requires adequate distribution of goods with provision for such price reductions as are justified by low-cost distribution or by a regular policy of distributing surplus profit to the customer". That was a clear and firm reservation, made in 1949, by the Lloyd Jacob Committee, in its Report. As a result of it, consultations were held at that time with representatives of industry and commerce about these provisos and the result of the consultations made it quite clear that satisfactory safeguards of this kind could not be devised. By Section 24 of the 1956 Act collective resale price maintenance became unlawful and, at the same time, the individual enforcement of resale price conditions by a supplier was facilitated by Section 25, which gave suppliers the right, in certain circumstances, to take action against traders with whom they had no contractual relationship.

In moving the Second Reading of what was then the Restrictive Trade Practices Bill, my right hon. Friend the Minister of Defence emphasised that a first step was being taken in a complex sphere in which no earlier Government had made any progress. He indicated that the provisions on resale price maintenance could not be regarded as a last step. Indeed, experience of the operation of the 1956 Act showed very soon that the move from collective to individual enforcement made comparatively little difference to the economic effects of the resale price maintenance system, and that those who said that by the removal of collective enforcement it would wither away were shown not to have been justified in their expectations.

So we come to the present position. It is now apparent that there is no halfway house. The choice is as simple as this. We can permit resale price maintenance to go on in every case, with all that it entails in the way of higher costs, a less efficient distributive system and less opportunity for consumers' preferences to influence supply, or we can provide for price competition, and facilitate the introduction of new and improved methods of distribution by ending resale price maintenance, except when it can be shown that it helps the consumer and is not contrary to the public interest. That is really the alternative with which we are faced.

The Government have given very careful consideration to this matter and have decided, in the context of modernisation and the essential development of a competitive economy, that the arguments in favour of ending resale price maintenance, with the safeguards set out in the Bill, are conclusive. At a time when our effort is being devoted to getting goods to the ultimate purchaser as economically and as cheaply as possible, how can we continue to sanction a system under which a man can be taken to court for lowering his prices?

In 1958, the Council on Prices, Productivity and Incomes—the Cohen Committee—drew attention to this anomaly and suggested that the law should be reconsidered. Since then the Government have undertaken an extensive fact-finding inquiry. We collected information in confidence from representatives of commerce, industry, trade unions and consumer organisations. In all, evidence came from 74 associations. Over 7,000 questionnaires were distributed, which were returned by about 2,000 retailers, 150 wholesalers and 350 manufacturers. We have also made inquiries about conditions in other countries, in particular Canada, France, Norway, Sweden, Denmark and the United States.

These inquiries showed that in those countries the stimulus to competition had had beneficial effects on prices and methods of distribution. They showed, moreover, that the ill consequences which the genuine supporters of resale price maintenance had feared, did not follow. Experience shows that consumers in those countries have welcomed greater freedom to "shop around" for the combination of service, quality and price which they want.

As between two countries, or one country at different times, it is virtually impossible to say that this or that change is due to a particular factor. [Interruption.] I think that the right hon. Member for Belper (Mr. G. Brown) will have an opportunity to speak later. I was saying that if one is examining the experience of a number of countries it is not possible to say that a particular change is due to a particular factor, since many factors are involved. For instance, in Sweden, since the end of resale price maintenance, prices have risen a little faster than in the United Kingdom. That is perfectly true but, on the other hand, Swedish wages in the same period have gone up twice as fast as ours, so the figures are, indeed, complex when making this sort of comparison.

An interesting example has come from studies made in the United States of comparative prices in States which permit resale price maintenance and those which do not. When one is considering a country in which the other factors are fairly equal over the whole sphere, but where resale price maintenance is allowed in some States and not in others, it is possible to draw conclusions; and some of those which have been drawn are extremely interesting. Some of them were put forward by the United States Assistant Attorney-General, Mr. Orrick, in a speech about a month ago before the Senate Committee of Commerce on the so-called "Quality Stabilisation Bill"—a euphemism for resale price maintenance.

Mr. Orrick said that resale price maintenance was being used to step up selling prices of certain well known products ranging from fountain pens to household electrical goods by amounts ranging up to as much as 40 per cent. in the case of a well-known fountain pen. He drew attention to a special study of the prices consumers were paying for spirits in Washington, D.C., where resale price maintenance has never been allowed, and in New York. New Yorkers are paying between 20 per cent., 30 per cent., and in one case 40 per cent., more than the inhabitants of Washington.

This conclusion is also borne out by the results of a research study which compared prices of electrical household goods in Washington with prices in Baltimore and Richmond before and after these two towns abandoned resale price maintenance. Before they did so, prices were 35 per cent. and 40 per cent. higher than in Washington. When they ended it, the prices in Baltimore and Richmond fell over a wide field.

If we are to discuss specific examples, and many may be put forward in this debate——

Mr. W. E. Padley (Ogmore)

Will the Minister give way?

Mr. Heath

No, not on this point—we should endeavour to take comparable circumstances for figures which are quoted about the effect.

Mr. Padley rose——

Mr. Heath

It has been said that the American Congress is about to make r.p.m. legal across the whole country, but I think that we should note that the President of the United States has advised Congress to— resist new steps to legalise price fixing". If we want more experience from other countries, in Norway, Sweden and Denmark the abolition of resale price maintenance is now taken for granted. Indeed, there is pressure in Denmark to remove price maintenance on two of the items which have previously been exempted.

So, after studying that experience, I would like to explain why we have reached the conclusion that resale price maintenance should be prohibited.

Mr. Richard Marsh (Greenwich) rose——

Mr. Heath

I am sorry, but I cannot give way.

Several Hon. Members rose——

Mr. Speaker

If the Minister does not give way, hon. Members must desist.

Mr. Marsh rose——

Mr. Heath

No. This is a very complex subject and I am endeavouring to develop the argument dealing with each of its aspects.

Miss Margaret Herbison (Lanarkshire, North) rose——

Mr. Heath

If there is more than one hon. Member on his or her feet, it is very difficult for me to decide to which one I should give way. I give way to the hon. Lady.

Miss Herbison

I thank the Minister for giving way. The right hon. Gentleman has been giving us details of a great many comparisons and studies which have been made in other countries. During those studies was anything done to find out what happened even to the most efficient small shopkeeper and whether, once the small shopkeepers were put out of business, the big monopolies did not hold the housewives to ransom and, indeed, cause the rise in prices which the Minister says was due to higher wages?

Mr. Heath

Of course there has been study of the effects on the retail distribu- tion system in other countries. I said earlier that the apprehensions which have been expressed of the kind the hon. Lady mentions were not borne out. In some places there has been a reduction in the number of shops. That is going on in a variety of ways in this country at the moment with r.p.m. Each of these things must be looked at according to the circumstances.

In Sweden, for example, I gather that there has been a general movement of population into towns from rural areas. This itself has affected the number of shops. I stick by my general statement that the apprehensions, certainly the one that this would lead to monopolies which put up prices, have not come about, as will be seen from the level of prices which I have quoted from the statement of the United States Assistant Attorney-General.

Mr. Marsh rose—

Mr. Heath

No.

I will now develop the reasons why we came to this conclusion. Where price maintenance prevails, all distributors are obliged to charge the same price, irrespective of variations in their costs and overheads. If they were free to compete, they could build up custom by adopting more up-to-date and efficient methods. If they cannot pass on the benefit to their customers in price reductions and so increase their business, there is no incentive to make changes. Resale price maintenance distorts the system by locking up reserves of capital and labour which are wanted elsewhere, and this, surely, deserves the closest scrutiny at a time in this country when consumer expenditure is increasing and the most urgent need is to make the most productive use of our scarce economic resources. As consumer expenditure will undoubtedly continue to increase substantially year by year, and as our population is also increasing, it makes it doubly necessary to look at this system.

What about the consumers? Under this system, people have to pay the same price for a particular product, irrespective of the sort of shop they go to and of the service they want. Another result is that shops vie with each other in a variety of ways—in selling gimmicks, and so on—because they cannot compete in price. This is not to the advantage of the public.

Some people prefer cheaper goods and less service, but the present system does not allow consumers to make their choice between price and service. The real point is that consumers ought to have that choice and retailers should be free to give consumers the choice they want. This is a view which, in this country, has been supported by the Consumer Council, and it is the experience of other countries, where consumers have made it plain that they welcome the opportunity to "shop around".

It is surely a striking fact, when one is having many examples quoted to one from other countries across the world, that, where resale price maintenance has been abolished, there is no evidence to show that the consumer organisations or the consumers are demanding to have it restored or reinstated.

We have our own everyday experience of the view that the housewife today takes of the variable prices which she now has in groceries since r.p.m. has broken down. At the Board of Trade we do not get consumers complaining about the opportunities for finding bargains which now exist in that trade. But people do not have to go looking for bargains and others, whose time is money, may pay a premium for proximity, for going to shops which are much closer and are local; but I see no reason at all why others should have to pay the same sort of premium on the Roods which they buy.

Some retailers have told me that the maintained prices on the goods they sell are needed to subsidise other services which they offer. I suggest to the House that we ought to follow this through, because price maintenance means that a product costs the same in all shops. So, if the margin is fixed at a level high enough to subsidise services some of them offer, it goes without saying that it is not appropriate to other shops selling the same product but not providing the service. Is this fair to the consumer?

I should like to take the service argument a little further. The services offered by many retailers in this country are of a very high standard, but that standard is not universal. We must be realistic about this, because personal experience shows that standards of service are in fact extremely patchy. What is obviously true is that resale price maintenance does not guarantee a high standard of service. On the contrary, it means that the customer has no choice about paying for the service and paying the same amount whatever standard of service is offered. Therefore, in taking this action we wish to restore to the consumer the right to choose what he wants to get.

How can this happen? It means that, where there is freer competition, there might be changes in the pattern of specific services offered to the public, particularly those of the repair and maintenance type. Some specialised service businesses might grow up. Indeed, in some trades this is already the normal practice. We must not assume that the present pattern is the best or is necessarily here for all time. The true test is which will best serve the public.

The same thing goes for quality. The Government have a responsibility for ensuring the standard of quality which is necessary for the protection of public health or of safety. They have similar responsibility to protect the consumer from being misled or deceived. There is a body of law, to which both parties have contributed, with these objects—the law on food and medicines, the various Merchandise Marks Acts, the Weights and Measures Act, the Consumer Protection Act, the Consumer Council, the new Hire-Purchase Bill, and so on. This legislation is designed basically to inform and protect the consumer, and I believe that today it is the right way of doing so.

Once we have safeguarded these fundamental requirements by legislation the issue becomes quite different, because thereafter it becomes a matter of choice and taste. I do not accept the argument that consumers need to be nursed along; I believe that they know what they want. There is nothing immoral about preferring something cheap and expendable to something durable and more expensive. There is a whole range of demand in between, and that choice should be provided.

Finally, amongst these arguments we have been told that resale price maintenance guarantees a special standard of what one might describe as commercial ethics. That is usually put in the popular form that if resale price maintenance is removed we shall see a very grave deterioration in the whole ethics of the distributive system. I do not believe that this is the case. More than 60 per cent. of retail purchasing today is outside of r.p.m., and I do not believe that these things that are so criticised happen within that 60 per cent.

Last year, consumers spent about £8,000 million on goods without r.p.m.—mainly food, though there was a sizeable amount of clothing and furniture, and the rest on a wide range of miscellaneous articles. I do not believe that when the consumers did that shopping they found a decline in business morality as compared with what they obtained when they shopped under r.p.m.

To sum up, I am not convinced by the arguments advanced in support of the practice of, r.p.m.——

Mr. Marsh

Will the right hon. Gentleman relate some of his remarks to the net book agreement, and the decision reached in that connection?

Mr. Heath

I was about to come to that particular point, and to say that we accept that there may be trades and circumstances in which one or more of the things I have been describing do apply; where there is this need for service, quality or variety. That is why we have drafted the Bill in its present form.

It has also been argued that the existence of r.p.m. keeps in being a wide variety of shops of different kinds. But, agreed, generally speaking, that it is for the consumer, by his actions, to decide the general pattern of retail outlets—and again in answer to the hon. Gentleman —it can be envisaged that without r.p.m. there would be a closure of shops which might cause real hardship to the public and, again, that is why we have made provision for this possibility to be considered under the Bill.

That brings me to a point that has been much discussed recently about the threat to the small shop. I should like to point out that the small shop holds a monopoly in some of the things that attract custom, and which I have just been discussing. These are local shops, and proximity is worth a good deal to housewives, and to others who shop at them. Often, they are centres of social life, and a good many people would not regard cost saving as a compensation for the loss of the personal service they get at their local shop.

Again, for the local shop there is no long chain of command going back to an office in another town. The owner himself can adapt his stock, his service and his hours—within the limits of the Shops Act—directly to the demands of the neighbourhood. Indeed, many of us know of circumstances in which the small shop next to the supermarket has been able to exploit that situation to its own advantage—it has happened in my own constituency—because it has concentrated on complementing the service supplied by the larger store, and we all know that elsewhere the small shops have been doing this.

Further, the grocers have shown what can be done by independent traders to compete on more equal terms with the multiples. They have formed their own buying groups or have joined groups sponsored by wholesalers. In 1961, the turnover of independent grocers belonging to groups of this kind—which give them the advantages of larger discounts on bulk buying—was £500 million. Good management can explore new techniques of accounting, of stock control and service. In the grocery trade, the wholesalers' groups I have described will often help the retailers, through an advisory service, to improve their facilities and techniques in regard to such things as stock control. That shows what can be done for the small independent retailer when price maintenance breaks down or is removed.

I know that many of the anxieties about the Bill centre on the small trader, and I believe that it is also known that I regard these fears to be exaggerated. The experience in other countries has shown this to be so. The small retailer, because of his characteristics, is an essential part of the distributive system—indeed, more than that, in this country, as in others, he is an integral part of our national life. There have been times in the past when people have said that the small trader was going under—it happened when the multiples came into the retail distributive trade. But it has never happened that the small trader has gone under, and it will not happen now. The reason is that the efficient small shopkeeper is flexible, and adapts himself to the needs of the consumer. As a result, he prospers, and deserves to do so.

I have at some length—and I make no apology for doing so—set the background of the subject of the Bill, and I should now like to turn to the Bill's actual provisions. Its general effect can be expressed very shortly: it makes it unlawful for any supplier to fix a minimum resale price. This general prohibition is accompanied by an exemption procedure which allows the arguments in support of resale price maintenance to be considered. We believe that this is a fair and just method of handling the matter.

Perhaps I could first emphasise that maintained prices do not depend on any legal contract or condition enforceable at law. A supplier can enforce his published prices by refusing to supply a dealer who does not observe them. So the fixing of prices, and their enforcement, is prohibited by Clause 1. But this would be ineffective if we did not, at the same time, prevent the other methods of enforcement. That is the object of Clause 2, which prohibits withholding of supplies. We have decided, and it is in the Bill, that manufacturers should be free to recommend an appropriate price, to advertise that price, or to print it on the packet. That point was made to us by many in the consultations we have had since I made my statement to the House on 15th January, and we have embodied it in the Bill. But the manufacturers may not enforce a recommended price by withholding supplies or refusing to supply except on terms less favourable than those offered to other dealers.

I should like to make it plain that this provision will not in any way affect a supplier's freedom to decide, on any other grounds, with whom or on what terms he will do business. It has been brought home to us by trading associations and retailers as being of the utmost importance that they should be able to make their own decisions as to the selection of their retailers. Some suppliers prefer to restrict their outlets quite deliberately, perhaps because they want people with particular qualifications or training. That is entirely unaffected by the Bill, and rightly so.

In deciding whether there has been a breach of Clause 2, and a withholding of supplies, the question for the court to decide will be whether the supplier would have withheld supplies if the dealer had not been selling below the recommended price. That is really the question that has to be answered. That means that a manufacturer may not withhold supplies on the grounds of someone selling below the recommended price, but it also means that the rest of the arrangements are entirely under his control.

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. Very few cases have been brought to our notice in which this has been a problem. In Canada, where an amendment was made to the Act, very few cases have been brought under that amendment.

This is the practice of selling goods at a loss to attract custom. Some manufacturers dislike it because they fear that it may cause other shops to give up stocking the goods in question. If a manufacturer refuses to let his goods be used as loss-leaders we do not want the general prohibition in Clause 2 to prevent him from doing so. Therefore, Clause 3 permits the withholding of supplies from a dealer who has recently been selling goods of the same kind as loss-leaders. I emphasise "of the same kind". Loss-leadering is defined in the Bill as selling at or below the price actually paid, allowing for carriage and any form of taxation or Purchase Tax, but not allowing discount and not allowing for the overheads of the business.

This is why the Clause is framed in this way. In fixing a price, a dealer must normally be at liberty to distribute his overheads as his commercial judgment suggests to him. This is done throughout innumerable firms whether they are distributive or manufacturing. As I have said, it is normal for the dealer to distribute overheads as he wishes and, therefore, the only practicable test for an Act of Parliament is the price actually paid for the goods. Many retailers, including small shopkeepers, want to be able to allocate their overheads in the way they think suitable and the consumer is not in any way suffering when they do this. Therefore, we believe this to be a fair arrangement for loss-leadering.

I should like to say a few words about the remedies provided throughout the Bill. We believe that it would be wrong to make an attempt to keep resale price maintenance, other than by exemption, a criminal offence. We believe that civil proceedings for damages or an injunction should be taken against suppliers who contravene the provisions of the Bill. Proceedings for an injunction can also be taken by the Board of Trade and this should help the small trader who could not afford the cost of going to court. These provisions, dealing with means of enforcement, have been brought home to us by many who have discussed the matter and we have met the case by making them civil proceedings.

As for the exemption procedure, the tribunal for dealing with applications for exemption will be the Restrictive Practices Court. Clause 9 allows the appointment of additional judges for this purpose. There is however one inherent problem in devising a procedure for exemption. It arises from the fact that resale price maintenance is something which is carried on individually by a large number of manufacturers. Clearly, we could not have a separate hearing for every manufacturer, but it is important that the procedure should be fair and capable of working reasonably speedily.

We have, therefore, reached the solution, which is set out in the Bill. Any supplier who wishes to maintain resale price maintenance can apply to do so. When the applications are received it will be for the Registrar to sort them out and group them so that the cases brought before the court relate not to a particular manufacturer's brand but to a whole class of goods.

Mr. Dan Jones (Burnley)

Why not have economists and not judges sitting on the bench of the Restrictive Practices Court?

Mr. Heath

We have had experience of the Restrictive Practices Court in operation. The judges are helped by assessors. Expert opinion is available to them. We think that the obviously right way of dealing with these matters is by grouping cases together, because the argument must apply not to one trader, but all traders in this particular class of goods.

I have already mentioned the considerations which we had in mind in constructing the issue which will be before the court. This is dealt with in Clause 5. This has something in common with the similar provision in the Restrictive Trade Practices Act, 1956, but there are various important differences because resale price maintenance is a single, well-defined practice. Therefore, in drafting the conditions in Clause 5 it is possible to be much more specific than in dealing with the whole range of practices covered by the Restrictive Practices Court.

I have drawn the attention of the House to the fact that Clause 5 has been deliberately constructed on the basis of arguments which have been put forward for the retention of resale price maintenance by those who wish to retain it, in other words the quality and variety of goods, the number of establishments, and the necessary services. It has been deliberately drafted in that way, but this brings me to the very important question of the burden of proof.

I emphasise to the House that these are not criminal proceedings. There is no question of guilt or innocence. They are commercial matters under civil proceedings. But it has been suggested in discussions since the publication of the Bill that the question of the burden of proof is purely a technical, legal matter, which can, therefore, be easily changed in the Bill merely by reversing the onus and that it would still be perfectly compatible with the general principle of the Bill to turn it round in this way.

I must assure the House that this is not so. The burden of proof goes to the very root of the general conclusion which I announced to the House on 15th January—that resale price maintenance itself is incompatible with a competitive economy and, save in exceptional circumstances, should be brought to an end. I accept the view that many supporters of this practice sincerely believe the opposite. They believe that the practice is harmless and that only in exceptional cases should it be forbidden. I accept that that is the view of many of those who support resale price maintenance, but if we had reached this conclusion it would not have required this sort of legislation, and, therefore, there would have been no ground for a general ban on resale price maintenance.

The approach which we believe to be right, and which is embodied in the structure of the Bill, is fundamentally different from that. In coming to the general conclusion that it was incompatible with a competitive society and a competitive economy and, therefore, should be presumed to be against the public interest, we are led automatically to the method that resale price maintenance should be prohibited but that it should be possible for some to have exemptions, as I have been describing them. I think, therefore, that it is right that we should follow the practice of the 1956 Act and ask that those who want an exemption should make an application for it and state their case. This is the procedure used under the 1956 Act, and what we are doing in Clause 5 is to lay the grounds which have to be established to show that a particular case is exceptional.

As I have said, Clause 5 fairly represents the arguments which have been put forward about the interests of the consumers. The Clause as drafted will, I believe, enable the Court to give the arguments fair and adequate consideration. There will be every opportunity for all those who believe that their case is justified to put it before the Court and for the Court to reach a decision.

As for the timetable, under Clause 6 suppliers will have three months, starting one month after the passing of the Bill, to make their applications. Until four months after the Bill is passed, the provisions of the first four Clauses will not be brought into effect, that is to say, the Order making the prohibition cannot he made until after the end of the period for making applications for exemptions. But prohibition will not apply to goods in respect of which an application for exemption has been made until that case has been heard.

The adoption of a judicial procedure in the Bill carries with it another important consequence which I should like to put before the House. It is for Parliament, in its discussions on the Bill, to lay down the principles to he applied, but it for the Court then to interpret those principles. This is basically the reason why we came to the conclusion that it would not be appropriate to make statutory exceptions in the Bill itself, because this would amount to Parliament laying down the general considerations, the Court examining those considerations and making judgments but Parliament also making an arbitrary decision in advance of the Court's consideration. This was the reason why, after very careful consideration, we came to the conclusion we did.

What I am sure we ought to do in Parliament is to satisfy ourselves that the criteria in the Bill fairly represent the grounds of which account ought to be taken, it then being for the Court, by its established procedures, to apply them to the circumstances of particular cases in the light of all the evidence which is available.

I believe that the Bill incorporates many desirable safeguards which have been urged on the Government. If there is substance in the arguments which have been put to us, they can be put to the Court, which can be depended upon to assess them.

I shall say a few words now about the legitimate interests of the retailers. Retailers of course, are greatly concerned with the resale price maintenance system. Clause 8(3) gives those concerned the right to be represented before the Court in support of an application by a supplier. It has been suggested that retailers should themselves be entitled to apply for exemption, but this, as I think the House will realise, would involve one in a dilemma. It springs, I think, from a misconception, which I endeavoured to dispel at the beginning, of the nature of resale price maintenance. Resale price maintenance is something done by the manufacturer for the protection of his brand. No distributor can compel a manufacturer to carry out resale price maintenance. If, today, any particular manufacturer drops resale price maintenance, that is the end of it, and no retailer, either in the 40 per cent. of the trade covered by it or not, is in a position to do anything about it. Therefore, it would not benefit the retailer to be able to secure from the Court an exemption for a supplier which the supplier had not applied for and was not prepared to use.

Although applications may be made—indeed, they must be made—by people who are actually practising resale price maintenance, we have made sure by one provision that retailers can make their case heard. The retailers' special contribution to the case will certainly not be overlooked because there is conferred on them by Clause 8(3) a right of very substantial value. They will be there not only to give evidence on behalf of the applicant, the manufacturer, but they will be free to brief lawyers and contribute to the deployment of the case. Therefore, the retailer will have every opportunity, either in a group or through his association, to make his own case heard.

The last provision I mention is that providing for the decision of the Court to be reviewed after two years, if circumstances have changed.

I have endeavoured to explain all the provisions of the Bill. The Government are satisfied that the principles embodied in it and its basic provisions are right but this, of course, does not mean that our minds are closed to practical and constructive suggestions for improving the Bill which may be made in our discussions in Committee. However, we believe that the principles of the Bill as I have set them out are right and should be carried through to implement the statement which I made to the House.

I conclude in this way. I think that the Bill will be an important addition to the body of legislation designed to foster competitive trade in all sectors of the economy. The greater freedom will produce a better distributive system. Consumers will enjoy benefits in the form of lower prices. Retailers will have freedom to lower their prices as they see fit.

It is true that it is not possible precisely to measure these benefits, but this does not make them any the less important. The trader can improve efficiency, cut his prices and expand his trade. The pattern of retail trade will change and traders ought to be encouraged to meet the demands of the consumer. Let the consumer choose, and pay for, the type of service that he wants.

I think that there is sometimes a danger of forgetting that all this comes back to the consumer. The whole apparatus of production and distribution exists simply so that the consumer—that is, each one of us—may be supplied as cheaply, as efficiently and exactly as possible with what he wants. It is sometimes implied that he can hardly look after himself. I do not believe that the public are so helpless. They are the best judges of what suits them and of what they want to pay for in the way of variety of goods, convenience or services—whatever it may be.

The consumer needs certain basic protections, and these the Government give. The Government's policy is really to obtain greater competitive efficiency within the economy as a whole and to set out a framework of legislation for the basic protection of the consumer. The Bill will be a means of adding to the consumer's freedom of choice and of assisting with the stabilisation and reduction of prices. But, much more even than that, it is part of a policy to make the economy more dynamic for producing the sustained expansion on which depend all the programmes for modernisation which the country so much desires, and to which the whole country can contribute by greater enterprise and greater initiative whether in the economy as a whole or in the distributive trades. I commend the Bill to the House.

4.37 p.m.

Mr. Douglas Jay (Battersea, North)

I hope that it will not be out of order for me to intervene at this stage in the rather savage controversy which is raging on the benches opposite. I realise that, if I do this, I run the risk of being struck by some missile aimed by one faction opposite at one of the others; but this is a risk which peace-keeping forces have to accept all over the world, and I gladly accept it.

I can well understand that so many hon. Members opposite are aghast at the record of their own Government. There are three main issues involved in the Bill and the White Paper which was published last week: first, resale price maintenance, that is, manufacturers' control over retail prices; second, the power of the Monopolies Commission; third, the control of mergers by the Government.

First, let us look at the Government's record on resale price maintenance proper. In 1956, the present Minister of Defence, who, very properly, is with us today, introduced the Restrictive Trade Practices Bill, giving manufacturers the power, which they had never had before, to enforce by law on retailers price contracts to which those retailers were not a party. We opposed that provision. The Government forced it through, and they are now reversing it by Clause 1 of the Bill now before the House.

The present Secretary of State for Industry and Trade, who now wants to reverse it, was, in 1956, the Government Chief Whip who marched all his troops through the Lobby in its support. He marched his soldiers up the hill then, and now, apart from a few gallant mutineers, he is marching them all down again. The Minister of Defence, who then so eloquently exhorted us all to support his Section 25, will tonight be obediently voting against it.

Secondly, let us look at the Monopolies Commission. Before 1956 it worked in more than one group and, therefore, much faster. The Government, in their 1956 Act, curtailed its size and scope. During the Second Reading of that Bill on 6th March, 1956, I was rash enough to say this: Our third serious objection to the Bill is that…the President of the Board of Trade is drastically curtailing the scope of the Monopolies Commission."—[OFFICIAL REPORT, 6th March, 1956; Vol. 549, c. 1952.] We said that this would seriously slow down the whole process, and that the Commission should be allowed to go on in separate groups. But the Government, with the help of their resolute and efficient Chief Whip, forced this curtailment through the House.

Now we have the White Paper, which says, on page 3: The Government consider that the Commission should again be enlarged and given the right to work simultaneously in groups on several inquiries at once. These changes should also enable the Commission to work more quickly. Thirdly, let me turn to the other issue of mergers. In the I.C.l.—Courtauld debate on 14th February, 1962, just over two years ago—I am sorry to quote myself again, but I happened to be speaking—I was audacious enough to say this: The time has come to give a standing public authority, possibly a reinforced Monopolies Commission, the job of looking into major merges."—[OFFICIAL REPORT, 14th February, 1962; Vol. 653, c. 1337.] The then President of the Board of Trade, now the Minister of Power, who is also with us today, replied that this was quite impossible. On the same day he said: The experts"— that is, the experts carrying out the inquiry— would have to have a clairvoyant sense if a public inquiry of the character suggested was to be of true value.…I believe that the Government are right…not to make a change which might create awkward and undesirable precedents.…"—[OFFICIAL REPORT, 14th February, 1962; Vol. 653, c. 1354.] Last week's White Paper states, on page 4: …the Government propose that the new Monopolies Commission should be empowered at the direction of the Board of Trade, to inquire into any proposed or recently completed merger…. This is a record which, I think, speaks for itself. However, nobody should suppose, despite all these somersaults, that on monopolies and mergers, as opposed to retail prices, this new White Paper carries us very far or very fast. When examined carefully, it turns out to be slow and timid.

On monopolies, although the Government will ask some day for more legal powers, they are also introducing another delaying stage into the process. There is to be a new Registrar of Monopolies, in addition to the Registrar of Restrictive Practices. There will, therefore, now be at least five stages in the approach to each monopoly. Let us remember, in passing, that in the recent case of motor electrical equipment the existing two stages: first, investigation by the Commission; and, secondly, meditation by the Board of Trade—have occupied six years and one year respectively; and still we have no decision.

In future, three bodies will be involved and at least five stages. First, the Registrar will select cases for inquiry by the Commission. Secondly, the Board of Trade will, or will not, I suppose, approve references to the Commission. Thirdly, the Registrar will investigate the facts and, in the White Paper's words, set out the issues". Fourthly, the Commission will decide where the public interest lies, and make such further investigations and elucidations as It thinks necessary. Fifthly, the Board of Trade then meditates—which usually takes a year—on the Commission's report and, perhaps, some time, some day, accepts it, and presents an Order to Parliament.

On the Government's record in recent cases, I should have thought that the treatment of a single monopoly by this procedure would take anything up to 20 years. In any case, the Registrar cannot even be appointed or the Commission enlarged until we have more legislation, and we shall not have any legislation of this kind in this Parliament.

On mergers, it seems to me that the proposals are about equally speedy and effective. There is, first, to be an inquiry into any recently proposed or completed merger by the Government. The White Paper says that the Government do not intend to hold up a proposed merger while it is being investigated. The Commission will report after the merger has gone through and, we are told in the White Paper, that then it would be for the Government to take such action as they believed to be necessary". But does the Secretary of State really think that it would be a sensible or, indeed, practical procedure to allow a merger, such as that between and Courtaulds, to go through and then to unscramble it many years afterwards? I should have thought that that would be as unfair to I.C.I. and Courtaulds as to the rest of the community.

There is one further proposal on restrictive practices in the White Paper which does not seem to have been much noticed. This does not strengthen existing powers, but positively weakens them. The right hon. Gentleman said nothing about this matter. The Government propose to introduce a new ground for establishing that a practice is in the public interest in addition to the famous gateway which the Minister of Defence put in Section 21 of the 1956 Act. But a new ground means a new gateway, and that makes it easier to get through. We are told that the new one is intended for the information agreements which are now being brought into the net. But we are also told that its use will not be limited to them. Therefore, here the legislation is being weakened.

What stands out in all this is the astonishingly different treatment meted out by the President of the Board of Trade to the great combine, on the one hand, and the small shopkeeper, on the other. In addition to what I have said, there are two other glaring forms of discrimination. In the first place, whereas r.p.m. is presumed to be against the public interest unless those practising it prove that it is not; when we come to monopolies, the Government propose to presume that they are in the public interest unless the public authority proves that they are not. But even more important and more glaring are the Government's priorities. When the small shopkeeper's livelihood is at stake, we get precise and, in some respects, rather drastic legislation now. But when it comes to monopolies the combines, mergers and commercial services, we are put off for legislation, until perhaps next year, some time, never.

I ask the Secretary of State what possible justification there is for this priority. I do not see the Government's answer to the charge of outright discrimination against the small man. The President of the Board of Trade has had plenty of time. He took up his job last October; I do not think that he will deny that. The previous President of the Board of Trade told us in the I.C.I.-Courtauld debate two years ago that the Board of Trade's private inquiry into mergers and monopolies was already going on.

Therefore, the present Minister must have found the conclusions from the Board of Trade's inquiry on mergers and monopolies as well as on r.p.m. waiting for him when he took office in October last year. If he had time to draft a Bill on the one, why had not he time to draft a Bill on the other? Not surprisingly, many people other than the shopkeepers are drawing the conclusion that we may never get this further legislation on monopolies.

The Government, I believe, are also misleading the public in giving the impression—we have had it all again today—that substantial and early falls in prices will result from the Bill. The White Paper starts with a great flourish about reduced costs of production and distribution—and the right hon. Gentleman said it several times this afternoon—and says that it is against this background that these proposals should be judged. Very well. The truth is that the Bill will make no difference for quite a time, and very little difference even in the long run, to the cost of living.

The right hon. Gentleman quoted from other countries. Incidentally, since a Bill rather like this was passed in France the cost of living has risen by 60 per cent. I know that that was not cause and effect—[HON. MEMBERS: "Why say it?"] If the right hon. Gentleman will wait, that is exactly my point. The truth is that the presence or absence of r.p.m. makes comparatively little difference to the level of prices as Compared with all the other economic forces which are at work. Indeed, probably much mere could be achieved by attacking the problem of manufacturers' costs and prices.

The right hon. Gentleman now tells us—this is a new figure; I accept it for the purpose of this debate—that 60 per cent. of retail purchases by value are not price maintained. Of the remaining 40 per cent. which are still price-maintained, the end of r.p.m. will not reduce prices on average by more, I should have thought on experience, than a few per cent. Most foodstuffs, we were told today, are already outside the scope of r.p.m. In any event, I am not sure that I regard a reduction in the price of cigarettes, gin and whisky, however desirable, as a very long step towards Utopia.

One of the oddest of all the features of present Government policy is that while the President of the Board of Trade is so keen to reduce the price of cigarettes, whisky, cars and television sets at almost any cost to the retailer, Government policy is, at the same time, actively pushing up both rents and the price of food. Does not the right hon. Gentleman know that his colleague the Minister of Agriculture is forcing through Parliament a Bill which will enable him to persuade our overseas suppliers to charge us more for food and to place special taxes on all the main foodstuffs if he does not succeed at the first attempt?

Mr. R. J. Maxwell-Hyslop (Tiverton)

Why does the right hon. Gentleman use the expression "forcing through Parliament" when the Bill was welcomed from the Opposition Front Bench?

Mr. Jay

The hon. Member cannot have listened to the debate. That Bill was severely criticised and has been considerably amended since. We are not, however, considering that Bill today.

Having thus looked at the Bill against the background which the White Paper proposes, we can judge its main provisions in better perspective. Clause 1, in effect, takes away from the manufacturer and wholesaler the right given to him by law to enforce in the courts a minimum price on retailers who have not signed the contract. We on this side opposed the granting of that power in the 1956 debates, both on Second Reading and in Committee.

We did that for two reasons. First, it is a fairly steep proposition in law and in equity—economics is not the whole of this argument—to allow anybody to enforce a contract on people who were not a party to it. This, at least, needs strong justification. Secondly, we did not then think that a sufficiently strong economic justification had been made out.

Price enforcement of this kind by the manufacturer takes away freedom of choice from both the retailer and the consumer. It deprives the retailer of freedom to charge what price he chooses in accordance with the services which he offers and the costs which he incurs. It certainly deprives the shopper of freedom to choose between extra services and convenience at a higher price and fewer services at a lower price. There must, therefore, be some force in the argument that r.p.m., enforced by Section 25 of the 1956 Act, prevents real economies—we do not know how much —being passed on to the consumer. Indeed, if the extreme defenders of r.p.m. did not believe in their hearts that its abolition would lead, on balance, to a fall in prices, I doubt whether they would be as passionate in their opposition to abolition.

We on this side, therefore, having opposed Section 25 in 1956, accept its reversal now for basically the same reasons. Since we have more respect for consistency and responsibility than the party opposite, we shall for that reason not oppose the Second Reading tonight.

We shall, however, criticise a great deal of the Bill, because the Government go much further in this rather curious Measure that the mere removal of Section 25. In 1956, the Minister of Defence, having outlawed the collective boycott—and everybody would have agreed with him on that—could have left things like that; but he did not. He brought in the law with a crash in his Section 25 on the side of the manufacturer.

The President of the Board of Trade now might have simply repealed Section 25 and left the whole issue to the play of business forces. That, I believe, is what prevails in Belgium and Holland, for example. But the Government are not doing that either. They now swing right round with a violent jerk in Clause 2 and bring in the law equally heavily against the manufacturer.

By Clause 2 the manufacturer, having lost—as I think, rightly—the power to enforce his prices by law, is now to be compelled by law to supply retailers whom he does not want to supply. He is even to be forced to supply a retailer whom he does not want to supply and never has supplied, as the right hon. Gentleman will find if he looks at Clause 4(4.a) of his own Bill. The manufacturer is to be presumed in these circumstances by the courts to be withholding supplies in fear of price-cutting simply because he is supplying other retailers and because the retailer in question previously had cut his prices. That seems, at first glance at least, to be fairly steep in the other direction.

The manufacturer might be small and the retailer might be large. Although it may be necessary in some circumstances to force a manufacturer to trade against his will, it surely needs a much stronger justification than does Clause 1, which merely deprives him of the right to enforce his prices on other people against their wishes.

One of the oddities of the right hon. Gentleman's Bill is that it proposes exactly the same procedure of exemption for Clause 1 as for Clause 2. Many traders will argue that because the Bill puts the onus of proof upon those asking for exemption, the Minister is, in effect, presuming people to be guilty and requiring them to prove themselves innocent. I do not regard that as a fair criticism if the manufacturer is asking to be given back the power to enforce his dictated prices by law. It may, however, be a cogent criticism if he is merely asking to be relieved from the new obligation to supply retailers whom he does not want to supply.

Therefore, even if we leave the onus of proof on the trader in the case of Clause 1, one of the main Amendments which we must consider in Committee is whether, in the case of Clause 2, it should not be placed upon the Registrar.

Our next criticism of the Bill is that in the proposed procedure for claiming exemption the President of the Board of Trade puts the retailer and the distributive worker in an inferior position to the manufacturer. According to the Clause, any supplier—which means the manufacturer or wholesaler—can give the notice which starts proceedings, but the retailer cannot. Nor can the distributive worker. Nor, indeed, can either of their associations. The right hon. Gentleman said that this was because it was the manufacturer who actually enforced the prices, but that is really no answer. It might well be that a manufacturer is willing to do so, but that the retailer wishes the case at least to be argued before the court.

Therefore, I see no justification for leaving the retailer out of this. It is rather characteristic of the right hon. Gentleman that he seems to treat the small shopkeepers as second-class citizens in this respect.

Mr. Heath

I must protest against such an unnecessary statement. I explained clearly why we adopted this procedure. In the case mentioned by the right hon. Gentleman, if the manufac- turer is willing to do it, he applies. There is no difficulty.

Mr. Jay

That is the right hon. Gentleman's argument and I do not agree with it. The retailer might wish to start the proceedings and we believe that he should be allowed to. But the right hon. Gentleman goes even further. In Clause 8, he permits the retailer at least to be represented at the hearing but the distributive worker is not allowed to be represented. He is treated almost as a third-class citizen.

We regard this discrimination as intolerable. Whatever form this legislation takes, there really must be equality before the law. And that means that retailers and distributive workers and their associations in each case should be put on an equality with manufacturers and wholesalers. I can promise the right hon. Gentleman that some Amendments will be put down to that effect in Committee.

Sir Alexander Spearman (Scarborough and Whitby)

Will the right hon. Gentleman explain what would be the advantage to the retailers if they could not enforce it?

Mr. Jay

I have already pointed out that the manufacturer might wish to enforce and, therefore, it is desirable that the retailer should have a chance to argue the case.

There is a strong case, also, for giving both manufacturers and retailers, under Clause 5, which defines the grounds of exemption, a chance at least to argue that any benefit to the consumer is exceeded by a greater damage to themselves. At present, the Clause as it stands rules that the case must wholly be argued in terms of benefit to the consumer. But surely, in fairness to the shop keeper and the shop worker, Parliament should at least allow for the possibility that the benefit to the consumer might be outweighed by a greater damage to the retailer.

If the right hon. Gentleman says that it would be beyond the power of any court of law to determine relative benefits of this kind, I must remind him that it was the Government and not we who insisted in 1956 on handing over this decision to judges rather than to Ministers. We opposed it then and I am still far from satisfied that it was right. Nevertheless, the Government have set up this system and they have based the Bill on it; so that if we are to have that sort of machinery we must ensure that justice is done by it to all.

Finally, we are far from satisfied with the loss-leader Clause. Parliament cannot ignore the evidence from a great many countries that loss-leader practices are a serious problem and that traders fears about them, even though they may be exaggerated, are nevertheless genuine. We must, therefore, have a loss-leader Clause. Apparently, the right hon. Gentleman agrees because there is one in the Bill. But if we do have such a Clause it must be genuine.

I find it difficult to believe, however, that the right hon. Gentleman regards the Clause as it stands as very much more than a sham. All that the supermarket has to do is to charge ½d. more than it paid for its goods. It may be a television set, or a washing machine or, indeed—although not in a supermarket—a car. If it does so, then it will be totally exempt from the Clause. If even that fails, it merely has to announce, apparently, that it is having a clearance sale.

This Clause will have to be materially amended. Since the right hon. Gentleman himself believes it necessary to include a less-leader Clause, it is just as much up to him as to the rest of the House to see that it is genuine and not one which brings the law into ridicule and contempt.

The Chancellor of the Exchequer is to reply to the debate. Since he has been at the Treasury, on and off, through all the disasters of the last 10 years, he will remember that, when the controversy was raging about Purchase Tax losses of retailers' stocks, some traders got round this difficulty by arranging to keep goods in the legal ownership of the manufacturer right through until the goods passed into the hands of the consumer, thus treating the distributors as agents. Is there any provision in the Bill which would prevent manufacturers from doing the same again and circumventing the Bill? If there is no resale, then the Bill, as I understand it, does not bite at all. Could that not easily be done with motor cars, or with a number of other goods?

I hope, also, that, both today and at later stages the Secretary of State will fulfil his promise to listen seriously to the criticisms made and the Amendments proposed from both sides of the House. I hope that he will not turn down everything after reciting prepared briefs and without listening to the argument. He is sometimes rather obstinate in the House, and is sure that he is right and everyone else wrong. One of his critics on the benches opposite is reported to have said that we cannot do with two General de Gaulles in Europe. I do not think that there is room for even one General de Gaulle in this House—

Mr. Wilfred Proudfoot (Cleveland)

Or for Poujade.

Mr. Jay

—and I hope that the right hon. Gentleman will approach with an open mind the Amendments which will be proposed from both sides.

The remark of the hon. Member for Cleveland (Mr. Proudfoot) about Poujade shows the attitude of some hon. Members opposite towards shopkeepers.

Mr. Proudfoot

The right hon. Gentleman should know that I am a small shopkeeper. I own only four small stores.

Mr. Jay

It will be interesting to see how the hon. Gentleman votes tonight.

It is clear, on any examination, that the Bill has many defects and is sorely in need of amendment. Because, however, we on this side favour the enlargement of consumer's freedom of choice, and do not believe that price competition should be sweepingly forbidden by law, we shall not oppose the Second Reading.

Despite that, the Government's record over the wider issue of monopolies and mergers, their repeated vacillations and retreats, their soft treatment of the great combines and rough treatment of the small man and their neglect of the problem of manufacturers' costs and profits—all these deserve, and will soon receive, the condemnation of the country.

5.10 p.m.

Mr. Keith Stainton (Sudbury and Woodbridge)

It is with a great and sincere sense of humility and a real feeling for the historical background of the House that I rise to speak here for the first time. First times can vary from the glittering occasion to what I have heard described in Westmorland, where I was born and raised in quite modest circumstances, as the first, last and the ruddy-well monumentally everlasting. I sincerely hope that not only on this occasion but henceforth I shall be able to contribute to the proceedings of the House both in human and useful political terms.

In this my maiden speech as the new Member for Sudbury and Woodbridge, I am sure that my primary duty, and my overriding wish, is to pay tribute to my predecessor. John Hare has gone to another place. But I have no doubt that hon. Members on both sides of the House will join with me in wishing him all the best as Viscount Blakenham of Little Blakenham—there is a Great Blakenham over the hill—in the County of Suffolk. I have no doubt that just as John Hare won the affection and admiration of the people of Suffolk, so, as a distinguished Member for no less than 18 years, he enjoyed the good will of all hon. Members. His friendliness, humility, approachability and, above all, his willingness to see all sides of any question have made him a whole host of friends, whatever their calling or political complexion.

From a number of Press cuttings which have come my way, I gather that the result of the by-election in Sudbury and Woodbridge surprised many. A certain cartoonist even pictured Sudbury as the lone swallow which did not necessarily make a summer. I hesitate, however, to describe the characters depicted in the cartoonist's shooting party out after their pheasants. Similar pundits have toyed with the idea of portraying a mad March hare scampering in crazy zigzag fashion over the fallow winter fields. May I remind the House that even the vitriolic Cobbett in his Rural Rides spoke of Suffolk as a county of true abundance and good husbandry. Alas, in one phrase he said that he always found Suffolk men great boasters of their superiority over others. But, after a semi-colon, he added that he had to say that that was not without reason.

The purpose of the debate is to consider the Government's Bill to restrict—and I emphasise restrict as opposed to abolish—the practice of resale price maintenance. I must now address myself to this important departure in the business practice of this country. Before doing so, I must declare an interest as a director of a public company which acts as general wholesalers and operates a chain of retail outlets. Foodstuffs, "near" foods and alcohol are our line of country. In declaring this interest, I hope that I am able to convey, without undue precociousness, some intimate appreciation of the Bill.

I understand—indeed, I could not have failed to register after all the advice which has been heaped upon me—that a maiden speech must be non-contro-versial. This I intend to make my endeavour, even if a pebble or two are dislodged underfoot, My task in this regard is enormously facilitated by the fact that all political parties have committed themselves to the same objective, albeit some more harshly and forthrightly than others.

The Bill must commend itself to the House even if only because we as a nation do not wish to be daubed as the last outpost of Poujadism in the West. The attitude, temperature and thrustfulness of business management is all-important in our endeavours to drive forward to the goal of modernisation and fuller economic wellbeing. Coupled with the White Paper on further action against monopolies and restrictive practices—including, I am glad to see, "information agreements" and "price leadership"—I regard the Bill as an important contribution to the modernisation of Britain.

It would be wrong, however, to concentrate too much on the immediate price benefits to the consumer from a restriction of r.p.m. This will in any case be unlikely to exceed an overall reduction in the cost of living of one or two points over the next year or so—whatever the dramatic gestures with bottles of whisky and washing machines and T.V. sets. This, quite simply, is because the effective area over which r.p.m. now operates is not overwhelming. Spending on foodstuffs is virtually 30 per cent. of consumer expenditure, and r.p.m. went out of the window in this respect two or three years age, as I realised in very salutary terms, having reacted in my own company. Perhaps a further 40 per cent. of spending is also unaffected.

This leaves us with a balance of 30 per cent. or so of recurrent consumer expenditure which is covered by ostensible r.p.m. I stress that it is ostensible r.p.m. because we all know of what in Germany is called the "grey market" —staff association club cards; knowing someone who knows somebody else who can get it wholesale; the argy-bargy of trading in one's old T.V. or washing machine or car—and 90 per cent. of new cars are sold against trade-ins. The real meaning of the Bill is basic and long term.

I have already stressed the thrustfulness of management and the keen edge of competition, and I should now like briefly to turn to the structure of the retail trades to see what might happen if this thrustfulness and keenness of competition make themselves felt. We have available to us the Censuses of Distribution of 1950, 1957 and partly for 1961. Looking at those 1961 figures which have been published, one is struck by the fact that the average size of retail outlets in terms of retail over-the-counter sales is £15,500. This is from 577,000 retail outlets. If out of this latter figure one takes a mere 3,750 department, variety and general stores, the average size of shop falls from £15,500 takings a year to £13,000. This average must surely conceal a situation of proliferation of small units from which resources could be better deflected to other parts of the economy.

I would a so draw attention to the poor productivity record in retailing. By a process of deflating prices in the 1961 Census of Distribution to the basis of 1950, it is possible to estimate that the true increase in productivity in retailing over the decade 1950–61 has been a mere 10½ per cent., while between 1952 and 1963 the productivity index in total manufacturing rose by three times as much. This contrast must be seen in the light of nearly two million persons engaged full time in the retail trades, and nearly 700,000 employed there part-time.

In some sectors of the retail trade performance has been better than that. Only a deeper analysis can reveal the areas now open to us for improvement, but it is this prospect of improvement and its impact on our general economic development over the years which should command our attention and which should commend the Bill to the House

5.20 p.m.

Mr. W. E. Padley (Ogmore)

It falls to my lot to congratulate the hon. Member for Sudbury and Woodbridge (Mr. Stainton) on his maiden speech, delivered with knowledge and sincerity and, I think, with courage, because, as the hon. Gentleman said, it is a tradition not to indulge in controversy. Anyone who in a maiden speech deals with resale price maintenance, which gives rise to strife not only between the parties but within the parties, is a man of deep courage and moral principle, and I assure the hon. Gentleman that we look forward to hearing many more contributions from him.

In common with the hon. Gentleman, I must declare my interest, but I think that before I have finished speaking it might be a declaration of disinterest. I am, of course, president of the Union of Shop, Distributive and Allied Workers. Our 360,000 members work in the co-ops, in the multiples and in the supermarkets. It might be said, therefore, that I would be in the camp of passing on the economies to the consumer and, through negotiations, sharing the spoils with the big employers.

During the course of my speech I shall give the minimum conditions for my union going along with the Bill. I find it difficult to sit and listen to arrant nonsense, and this is a subject on which much arrant nonsense is talked. I sought to interrupt the Secretary of State for Industry and Trade, but he declined to give way.

The statistics which the right hon. Gentleman gave from the United States of America were statistics of particular commodities in large towns. They were not the price level indices for the States which he quoted, and anyone with any knowledge of this subject knows that there are two certain consequences of the Bill. One is that three new judges will be appointed, and the other is that prices will go up everywhere except in the centres of the large towns. That is the common experience of every country in the world where r.p.m. has been abolished, and I speak as one who has an intimate knowledge of the countries in which this has happened and in which the trade union leaders are personal friends of mine. The only argument about the price level is whether prices in the centre of big towns will come down more than they go up outside those centres.

The right hon. Gentleman did well for a Conservative Secretary of State for Industry and Trade. Referring to the fact that prices had gone up a wee bit more in Sweden than in Britain, he said that wages had gone up twice as much in the same period. Indeed they had, partly due to a Labour Government, and partly as a by-product of economic policies which included the abolition of resale price maintenance. Resale price maintenance was abolished in Sweden in 1954, and there is now a strong differential between prices in the centre of Malmö, Gothenburg, Stockholm and other large towns in the rest of the country.

When the last wage bargaining took place in Sweden, there was an axis between the agricultural and forestry workers' union and the shopworkers' union. The wage bargain was that, whereas everybody else got a 4 per cent. increase, agricultural and forestry workers got a 13 per cent. increase and the shopworkers' increase varied between 18 per cent. and 22 per cent. paid on the ground that they had not shared in what the Swedes called the wage drift.

I confess that I do not fear the impact of the Bill in conditions of full employment and inflationary pressure on the wages and working conditions of my members. But, if it goes wrong, I warn the Chancellor of the Exchequer, who I am glad is here, and the Shadow Chancellor of the Exchequer, that the shopworkers' union and the agricultural workers' union in Britain will be as tough as their Swedish counterparts if it is necessary to defend the standards of life of their members.

The Secretary of State for Industry and Trade said that 40 per cent. of consumer purchasing is covered by resale price maintenance. Most people would think that that is an exaggeration.

Mr. Maxwell-Hyslop

It is.

Mr. Padley

I have been trying to understand why the right hon. Gentleman more or less doubled the usual figure. I suppose that the impact of taxation on tobacco, on alcohol, on motor cars and on radio and electrical goods means that of the 40 per cent. well over 10 per cent. will be a direct transfer to the Exchequer.

I suspect, also, that the right hon. Gentleman has included in the figures direct price maintenance as well as resale price maintenance. It is important for the House to understand that the Bill does not deal with price maintenance. It deals with one form, the old form, the cartel form. The new form, direct price maintenance, the monopoly form, the form of the future, is to be encouraged by the Bill. As Rosa Luxemburg said 60 years ago, "Today the capital-list State legislates for the cartel; tomorrow it will outlaw the cartel to enthrone the trust". It is true that the Bill, like the Restrictive Trade Practices Bill of 1956, seeks to outlaw the cartel, and I ask my hon. Friends to realise that it also enthrones the trust.

Today it is commonplace, even in the Financial Times, to say that the 1956 Act has encouraged mergers and takeovers. In 1950, 1954, 1955 and 1956 I said that and it was not commonplace. It was then regarded, if not as a Marxist aberration, at least, as a heresy derived from Luxemburg or Hobson. I predict today, as I did in 1955, that the result of the Bill will be to encourage both vertical and horizontal monopolies.

Let us deal first with vertical monopolies. In the figures given by the right hon. Gentleman about resale price maintenance, I do not know what calculations his advisers made for the footwear trade, but in that trade resale price maintenance today is relatively unimportant. The important thing is direct price maintenance. Two years ago the right hon. Gentleman's predecessor said that the British Shoe Corporation controls about one quarter of the retail market and that a substanial slice of its supplies were made in its own factories. A few groups dominate half the retail trade, and therefore the managing director of "Tuf" was right when he wrote to the Guardian a few weeks ago saying that this would weight the competitive battle on the side of direct price maintenance against resale price maintenance.

Again, in the figures which the President gave, I do not know what the House thought about the position of r.p.m. with regard to rubber tyres. When the Monopolies Commission produced its report, Dunlop had approaching 50 per cent. of the production and a 20 per cent. interest in distribution. That slice is direct price maintenance and not resale price maintenance, and the House can take it from me that if the Bill goes through it will not make manufacturers compete with one another. I doubt whether a price war in motor tyres is a desirable social objective in view of the number of accidents on the roads. This Bill will not solve the problem of monopolies at the producer's end of road tyres confronting a "monopsony", that is, monopoly buying power by the five big car groups. If we want to bring down retail margins on tyres we need price control, and probably a dose of public ownership, in the form of a takeover of Dunlop, the price leader.

Mr. Proudfoot

Will the hon. Member explain how I manage to buy any well-known make of tyre at 3s. in the £ discount as an ordinary retail grocer?

Mr. Padley

That point was answered by the hon. Member for Sudbury and Woodbridge. It does not affect my general argument. I predict that the trend in recent years will continue, whereby large retail firms, backed by financiers—the "Charlie" Clore outfit was not a growth from a small trader upwards, but a great concentration of financial and economic power—will go back to the manufacturing industry. Likewise, manufacturing industry will reach out into the retail trade. I want everyone to understand, therefore, that the party opposite does not legislate in the interests of consumers. It is the creature of big business, and this Bill is introduced in the interests of big business.

Secondly, whatever may be said about large multiple supermarkets which employ my members, they are not in business to pass on to the consumers the economies derived from large-scale operations. They are in business to pass on those economies to their shareholders. We have had the experience of Canada and Scandinavia. It is impossible for the President of the Board of Trade or his advisers to quote a single case where the abolition of the resale price main- tenance has reduced prices. In most cases—and this is more significant—gross margins have risen.

Statistics drawn from other countries can be tedious—the more tedious because they are difficult to check. But what about British statistics? Following the 1956 Act and the outlawing of collective boycotts, r.p.m. in the grocery trade collapsed. But what happened to prices and gross margins? On 7th February the right hon. Gentleman's own Journal gave us the answer. Did the census of distributive figures, comparing 1961 with 1957, show a reduction of gross margins in the grocery trade? No; it showed a rise from 15.4 per cent. in 1957 to 16 per cent. in 1961, thus justifying what I have been asserting dogmatically against Fabian employers, as well as some of my economist friends, over the years.

This is a staggering thing, because in the period from 1957 to 1961 the self-service revolution was proceeding apace. Whereas in the seven years from 1950 to 1957 about 10 per cent. of the grocery trade had turned over to self-service, from 1957 to 1961 that 10 per cent. had become 20 per cent., with a very substantial saving in manpower. The President of the Board of Trade again boobed on his figures. He said that manpower in the distributive trades was expanding. It is not.

In commenting upon the census, his own Department said that between 1957 and 1961 the effective labour force in the distributive trades dropped by 2 per cent. and the number of full-time employees dropped by 100,000. The Ministry of Labour figures take in part-timers and schoolgirls working in Woolworths on Saturdays, and if we equate those with adult male workers we can obtain the figures referred to by the right hon. Gentleman. But this means that from 1957 to 1961, in the conditions of an Eastern bazaar, with its bargains and gimmicks, £10 million a year was added to the grocery bills of British housewives.

In addition, all the economies of the self-service revolution were swallowed up by the advertising industry, the stamp trading companies and the shareholders of the large firms. I admit that my members benefited to some extent, but this benefit was much less than that justified by the growth in productivity. In the old days the manufacturer advertised the goods; today he advertises them and the retailer advertises the prices. We have the additional advertising on television, including that of the London Co-operative Society. Moreover, there are the stamp trading companies that we were discussing the other day. We must remember that 4d. out of every 6d. which the retailer pays to the stamp trading company is a direct imposition upon the consumer. My hon. Friend the Member for Wednesbury (Mr. Stonehouse) agrees with me about that, as does the hon. Member for Louth (Sir C. Osborne).

This means that the advertisers, the stamp trading companies and other middle men—the parasites—have been battening on the housewives and, to a lesser extent, upon distributive trade workers. This should not surprise us, because there was a time, not long ago, when great British economists discarded the outmoded nonsense of Adam Smith. John Hobson, who advised the Independent Labour Party, wrote the report of the Committee on Trusts in 1920. He was supported by others, including Sidney Webb and Ernest Bevin. The Committee on Trusts said that in some trades r.p.m. might be outlawed as being against the public interest, but that in other cases it should be permitted to continue, provided it was under public supervision and, in rare cases, under a system of price control.

To hon. Members of the Liberal Party I would say that Maynard Keynes, in the Liberal Yellow Book of 1927–28, in one of his lesser known but delightfully written essays, followed Hobson and added a few ideas of his own. He also took the view that in some cases r.p.m. should be outlawed while in others it should be retained, but always under public supervision or control. In the post-war period we have seen the enthronement of the old Adam of 1776 and the little Smiths of the post-war period. It is not surprising that Hobson and Keynes have proved to be as reliable guides on the problems of the distributive trades and monopolies and restrictive practices as on the bigger issue of economic crises.

In my view this Bill is right, in a very restricted sense, in that it wants to make r.p.m. publicly accountable. To that extent it is in line with everything that I have said since I have been in the House. To the extent that it provides only two alternatives—either to outlaw r.p.m. or to permit it to continue as a private form of price management, without any public supervision or control, it misses the third position—the position adopted by Hobson and Keynes and the T.U.C.—in the evidence which George Woodcock submitted—to the Lloyd Jacob Committee in 1947–48, and the position that I have taken up in this House.

From the trade union angle I am not unduly fearful about the passing of the Bill, but I believe it to be my bounden duty, before making a few practical trade union points, to warn everybody that it will not solve the problems of the distributive trades, bring down prices and reduce gross profit margins. The best academic advice—until academic economics retreated into its old position of the abysmal science and became more concerned with obscurantism than with enlightenment—is to the effect that we must increase public intervention, supervision and, where necessary, control. And where r.p.m. is linked with monopolies at the producer end there should be measures of public ownership.

The Bill provides a judicial procedure for appeals, and I am glad of that. I think that the public interest ought to be defined a little more widely. I accept that the public, as consumers and users, must have the paramount interest in such a Bill as this. But, as it is drafted at present, there could be a situation where 100,000 self-employed retailers and distributive workers could have an income reduction of £3 or £4 a week, and if one single consumer got ½d. benefit that ½d. benefit to the one consumer would outweigh the loss to the 100,000 retailers and distributive workers. That is the public interest as at present defined in the Bill. I am prepared to accept the paramount interest of the public as consumers and users. But surely there must be some qualification of the public interest so that there must be a comparable advantage to the public as a whole to offset what could be a drastic loss to an important section. I hope that the right hon. Gentleman will consider that point.

On the right to appear before the Court I reinforce what was said by my right hon. Friend. Obviously trade unions must have the same rights as retailers in this matter. How often trade unions would want to go before the Restrictive Trade Practices Court is open to argument. They have been already, and certainly in the book trade I can think of a smaller trade union which would want to give evidence against the abolition of r.p.m. in respect of books. Most hon. Members would agree that it is commonsense to give equality as between representative sections of the community.

I wish next to refer to loss-leaders. The loss-leader Clause is all that my right hon. Friend said it was. It is a hollow farce. I accept that it is not easy to devise a loss-leader Clause which is effective. But, added to the price paid by the retailer should be a nominal markup of 5 per cent. or 7½ per cent., and, of course, the enforcement against loss leaders should be done by injunction and not by the withholding of supplies. Many goods go through wholesalers. The idea that loss-leaders can be stamped out by the right to withhold supplies is an illusion. Haying used injunctions as a weapon of enforcement in every other case under the Bill, I cannot understand why the right hon. Gentleman suddenly drops it and replaces it by the withholding of supplies in order to stamp out loss leading.

Loss-leading in the narrow sense is not the biggest problem created by the Bill. The bigger problem—it has cropped up in other countries—is the sort of problem about which everyone knows. Even in conditions of boom and full employment, the electrical industries, for example, have their ups and downs. There is always the danger and the possibility that a large supermarket firm will go to a leading manufacturer, say, of vacuum cleaners at a time when production is running down and about to halt and make a bargain offer for 100,000 or 250,000 vacuum cleaners at a price well below marginal cost and proceed to sell them over the years at prices with which no retailer can possibly compete no matter how efficient he may be.

If the President of the Board of Trade thinks that is far-fetched, I advise him to talk to the leading manufacturers in the radio and electrical trades, as well as with leading figures in the retail trades. This means that if we are to have free competition and the abolition of r.p.m. the State will have to hold the ring very much more tightly than is provided for in this Bill. In addition to a strengthened loss-leader Clause, we need either—if I may use a verbal shorthand—a common carrier—common freight, or most favoured customer provision: that is, that a manufacturer would be obliged to supply goods to normal customers on the same terms, allowing for quantity discounts and so on, as he has sold in the preceding period to his most favoured customers. Unless we have that kind of discipline, the whole thing will break down.

I do not for a moment underestimate the difficulties which have been encountered in North America, France and Scandinavia in seeking to devise these remedies. But, unless they are devised, the purposes for which the Bill is said to have been introduced will not be realised. If this Bill reaches the Statute Book exactly as it is now drafted, and nothing else is done, in my considered opinion the honest traders and the consumers in Britain will have less protection than those in any country in Western and Northern Europe. I do not say that in any political party sense.

In the debate on trading stamps I made a very simple point. I was glad to see that Dr. James Jefferys, who did the monumental studies on the distributive trades for the National Institute of Economic and Social Research—it may interest hon. Members to know that my union had special cheap paper-wrapped editions printed for circulation to the membership and that Dr. Jefferys comes to our summer school every year, although he has not always converted my members to his point of view—came up with the same idea which has existed in France since 1st January, 1963, that it is a fraud to stick up a lying price, cross it out and substitute another. But anyone can do that in Britain. It is all very well for the right hon. Gentleman to say that the consumer does not need this kind of protection. But, once conditions are created which resemble an Eastern bazaar, we have what my hon. Friend the Member for Grimsby (Mr. Crosland) would call an imperfect market—a market so imperfect that the classical canons of economics do not work at all. That is the difference of emphasis between my hon. Friend and myself in these things.

To sum up, therefore, in my view, it is right that r.p.m. should be made publicly accountable. I think that this Bill is wrong in so far as it says that it should be either outlawed or kept as it is. There is a third position, of keeping it in certain trades under public supervision and, where necessary, public control. I think that the public interest needs to be redefined, including the interest of self-employed shopkeepers and distributive workers, leaving the interest of the public, as consumers, as the paramount interest. I believe that the loss leader Clause must be strengthened and further measures for the prevention of fraud, such as outlawing double price tickets, must be considered in Committee. I should have welcomed a totally different Bill which would have helped to create the planned distributive economy which I regard as necessary in a Socialist Britain.

5.48 p.m.

Mr. A. R. Wise (Rugby)

I beg to move, to leave out "now" and at the end of the Question to add "upon this day six months."

I shall base part of my argument on the speech of the hon. Member for Ogmore (Mr. Padley) with almost the whole of which I entirely agree. The hon. Gentleman pointed out so many difficulties about the Bill that, in my view, he made quite clear that it is incapable of amendment to fulfil any of the things which he said were necessary. I only hope that he will believe with me that the best thing to do is to give time for all parties in this House to reconsider the Bill to see whether they can produce a better one, instead of trying to make an extremely bad Bill only a very little bit worse.

With the exception of the Liberal Party, which I believe is unanimous in this matter, I think that there are divisions among hon. Members on both sides of the House. I have every reason to believe that there are hon. Members opposite who do not like the Bill despite the fact that they are allowing the Second Reading to go by. I am certain that there are hon. Members on this side who do not like the Bill at all.

We were given the reason that this was part of a great scheme for dealing with monopolies, restrictive practices and the like. It might well be that this is true. On the other hand, to pick out one of the minor bits of this great complex which, after all, has been fairly hallowed by tradition and proved by experience, does not seem the right way of going about it. I see no indication in the White Paper or elsewhere that we are to deal seriously with monopolies and restrictive practices.

I am not at all sure that it is either possible, or, indeed, desirable, but I hope that hon. Members opposite will realise, when I run through some of these monopolies and restrictive practices, that I am not condemning them, but merely announcing that they exist. If we are to take the whole thing in one great sweep, we must bring them all in and not carry out a selective series of actions on monopolies. I see no indication that we shall deal, for instance, with the coal monopoly. That is a protected monopoly. We have even forbidden firms to import coal to this country to produce slightly cheaper steel. If we are trying to reduce prices, let us be logical and get down to reducing the basic prices of all. I see no indication that we are to deal with the transport monopoly, from which I personally suffer a great deal in the City of London.

Restrictive practices? Is the closed shop a restrictive practice or not? I am not saying that it is undesirable. It may well not be, but I do not think that it can be denied that it is, in fact, a restrictive practice. When the Conservative Government were putting through the 1956 Bill, they came very close to including it in their list, because the present Minister of Defence, in the course of a speech on that Bill, pointed out that the dividing line between traders limiting entry to a field of supply and a closed shop limiting entry to a trade was not very wide. I ask the Board of Trade: is that true? I do not know, but if it is, and if we are to have this really wide-swept attack on all restrictive practices in the interests of a much freer economy, let us be courageous enough to face all its implications. That is not indicated even in the White Paper.

The first thing which horrified me most was when I came in the White Paper to the question of monopolies. Paragraph 8 says: The Government therefore reaffirm their view that it would be wrong to introduce into the law any presumption that monopoly is in itself undesirable… Surely it is not illogical then to introduce into the law the presumption that resale price maintenance is not in itself undesirable? This is not being consistent. This Jack the Giant Killer of great monopolies and restrictive practices may be wholly admirable, but one begins to think less of Jack when one finds him hunting around for a very small giant to start on.

Restrictive practices are dealt with in the White Paper, which makes great play with the fact that they were wholly condemned by the 1956 Act, but that is a misrepresentation. The Minister responsible for putting it through made it perfectly clear that individual price maintenance was never condemned by any report and was supported by a large number of organisations which thought that they derived benefit from it. It is not fair to include it in the White Paper as having been previously condemned when, in fact, it was not.

It has been suggested by many of my hon. Friends who dislike the Bill intensely that we should not divide the House on Second Reading, but concentrate on seeing what we can do in Committee. I have the greatest doubts that we can do anything in Committee. I see no signs of any indication of concession or yielding on the part of the Government, on any of the things which would make this into a tolerable Bill. I think, therefore, that we can only fall back on Omar Khayyam: Could thou and I with Fate conspire To grasp this sorry Scheme of things entire, Would not we shatter it to bits—and then Re-mould it nearer to the Heart's Desire! The Second Reading is the time to make this protest. The onus of proof is the main thing which sticks in the throats of nearly everyone who dislikes the Bill. It is a curious assumption that it should be suddenly thrown on those who approve resale price maintenance to prove that they are not villains.

We were told by my right hon. Friend that there was a terrific concession made when these things were taken from the criminal courts and made into civil actions. I suppose that we can be thankful that no one can actually be hanged for them, but that is hardly a concession. The Lloyd Jacob Report, which was a good one, made it quite clear that the onus of proof should be on the part of those who objected to the practice. What is the reason for the change? I do not know, but it seems as logical as it would be to restore the doctrine that a man with a red flag should precede a motor car. That was the law about the time when resale price maintenance was starting. It seems that we might possibly even find our way back to that.

We are told that this is in the interests of fair competition. Is it possible to maintain that? Are the Government prepared to alter Purchase Tax to make competition more fair? Have they realised that a person selling sweets, who buys in small quantities, not only does not get the benefit of discount for a large part of his trade, but pays more tax because it is levied on the amount which he pays for the supply? If that remains, there is no question of fair competition.

The small trader, we are told, will be able to survive. In my view, he will have to be astonishingly efficient. The definition is very hard to come by. I shall not fall back on sob-stuff, because I do not believe in doing that in the House, but many small traders, instead of settling down peacefully and living on National Assistance, have decided to try to see whether they can make a living by selling things over the counter. What chance are they to have? I submit, absolutely none. Once the Bill is through the small trader will not have a chance.

Are we prepared to make competition fair and to prohibit discounts for quantity? The hon. Member for Ogmore came very near to suggesting that we should make at least an effort to get a most-favoured-trader clause. I think there is a lot to be said for his idea, but it would be impossible to include it in this Bill. What are we to do about loss-leading? If we are to have any effective protection against loss-leading it will have to be fixed at the price paid by the purchaser plus a fixed percentage under which he will be compelled to sell. What is that but r.p.m.? Why should we not ditch the whole thing and keep r.p.m. as it is?

There are a number of anomalies in the Bill and in the policy behind it which I find difficult to understand. On the one hand, we have the Board of Trade trying to increase spending. On the other, we have facets of Government policy designed to reduce spending. If the Bill were successful all the efforts that have been made to relieve the strain on our manufacturing industry would fall to the ground, because that industry would be so overstrained that the troubles which the Chancellor is trying hard to avoid would recoil to an ever increasing degree.

The Lloyd Jacob Report is not quoted as much as it should be. It is interesting to note its recommendation on page 33: We recommend that no action should be taken which would deprive an individual producer of the power to prescribe and enforce resale prices for goods bearing his brand. To say that circumstances have changed since that recommendation was made is not a valid enough argument. On this side of the House we cannot use that argument at all, because what we were saying about the state of our economy in 1955, just before the introduction of the Restrictive Trade Practices Act, and what we are saying now are very much the same thing. [HON. MEMBERS: "Oh."] There is no need for hon. Members opposite to be surprised at that, for in both cases we are telling the truth. It is no good arguing that circumstances have changed because they have not, certainly not enough to make a serious impact on policy.

It must be remembered that the Lloyd Jacob Committee was not reviewing the circumstances of 1949, but the habit of restrictive practices and r.p.m. over the previous 60 years. During those years the economy had as many ups and downs as it has had in more recent years. It will always be that way. In any economy, whatever the circumstances and however full or low employment, there will be ups and downs. There are always bound to be fluctuations.

The Lloyd Jacob Committee found, as a result of gathering evidence, that individual r.p.m. acted to the benefit of the consumer. The Committee quoted evidence in its Report from a number of consumers' organisations—and I am referring not to any modern growth organisation such as the Consumer Council, but well established and respectable institutions—and found that consumers had derived benefit from r.p.m. We should take full account of what the Lloyd Jacob Committee pointed out on this score.

My right hon. Friend seems to believe that by cutting the retailer's profit, which is what the Bill will do, he will start a sort of price war among manufacturers. That does not in the least follow. I cannot see that the Bill will make the slightest difference to manufacturers, who will get the same prices for their goods and for whom, although a large number of outlets may be curtailed and they may suffer in the end from that, the Bill will have no direct interference with their activities.

To knock 1d. off a packet of cigarettes will not produce paeans of joy within Imperial Tobacco and to knock 1d. off a 6d. bar of chocolate will not lead Cadburys to start a price-cutting spree. Yet we are told that this is one of the objects of the Bill.

Does my right hon. Friend want to go on record as the Minister who, while the Minister of Health was trying to stop people smoking, made it cheaper for people to smoke, and as the Minister who, in the days when we were still striving for temperance, made it cheaper for people to get drunk? These points reflect the basic principle of the Bill, which will affect prices in a way that will do harm but certainly no good. It will not have any effect on the vast range of prices involving the vast proportion of goods, the majority of which are not controlled by r.p.m.

Figures were given by my right hon. Friend in a Written Answer at the time showing, a rise of 4.2 points in the cost of living between January, 1962, and December, 1963. Goods controlled by r.p.m. rose by only 0.28 of a point. In other words, uncontrolled goods rose by over twelve times that of controlled goods. I cannot see, therefore, that the consumer is likely to derive much benefit from anything the Bill may achieve.

What evidence do we have to show that the consumer has benefited from the abolition of r.p.m. in other countries? All we have heard might be used as evidence on either side of the argument. Prices have risen rather more where r.p.m. has been abolished than they have in this country. I am prepared to admit that there may be other causes, but it is absolutely unproven that the abolition of r,p,m, would do the slightest good for any one in Britain.

We should, therefore, be ill-advised to go so violently against the welfare of so many people who have benefited from the presence of r.p.m. Any possible benefits from its abolition are purely conjectural and are almost impossible to prove by almost any form of statistic. Allied to this we have assembled against the Bill a vast number of persons—the small shopkeepers obviously, their organisations obviously, the union most concerned and many of the multiple stores.

In addition, the chairman of Boots, a large and flourishing chain store, has come out strongly against the Bill; and it is worth remembering that he is the chairman of one of the multiples which might be said to stand to benefit from the Measure. We also have on our side an organise don which one might not expect to see in support of r.p.m., the Manchester Chamber of Commerce, that highly respectable body with a deep free trade tradition.

The Bill will do much harm to a great many people. That is clear. My right hon. Friend made that more or less clear himself when he said that it was necessary to put more people into industry and that shops were overstaffed. Does that remark mean the transfer from shops to industry of people who do not really want to be transferred? If so, that is not a good thing to do.

Time and time again, the Board of Trade—who, I think, are basically the sinner in this business—have pushed forward such a Measure as this. I have not had official information, but I believe that it has been turned down by the highest authority, not once but twice in the last two years. Whenever anyone gets involved with the Board of Trade he seems to be infected by this heresy. We are putting the old adage into reverse, and shoving the pigeon in among the cats.

The Government have, I think unfairly, faced hon. Members with a deliberate choice between two evils. Hon. Members can either oppose their own Government at a critical time—which, I can assure the Government, hon. Members are very unwilling to do—or they can choose what they consider to be the lesser evil; which is either passing without protest or actually supporting a Measure they genuinely do not like. That is not a question of sacrificing conscience; it is being deliberately faced with a choice of evils, and that was not a fair dilemma with which to face Government supporters.

Some of my hon. Friends and I have chosen what we consider to be the lesser evil. We are proposing to divide the House when the time comes, and to those who may consider this to be a wrongful action I would say that there comes a time when one must take action in response to a very deeply rooted belief—a belief that the Government are making a very grave and fatal mistake; not that we are making a mistake, but that the Government are making one.

As this is the Shakespeare fourth centenary, and we are putting his portrait in the most revolting way on the most revolting postage stamps, perhaps I might conclude my remarks with the following quotation from King Lear: …be Kent unmannerly, When Lear is mad… Think'st thou that duty shall have dread to speak, When power to flattery bows? To plainness honour's bound, When majesty falls to folly.

6.13 p.m.

Mrs. Freda Corbet (Peckham)

The hon. Member for Rugby (Mr. Wise) has made a very serious contribution to a debate on a very important subject that ought not to have been rushed on the House in this way. The hon. Member spoke of a time-hallowed practice. A practice that has persisted as long as this one has must have its merits, but I could conceive of the need for a thorough inquiry into the practical effects of this practice on our economy, industry by industry, before the House proceeded any further.

I am, perhaps, one of the very few hon. Members who have some practical experience of small shopkeeping, in which labour is hardly employed at all, in times of great difficulty—in the 1920s, when price cutting in the confectionery trade was a very serious menace to keepers of sweet shops. There is no doubt that the severe price cutting then carried on by what I would call unscrupulous traders in the great centres of population—very often people incurring heavy debts with the big manufacturers—had a very serious effect on the small shopkeepers who were just managing to get along and make a modest livelihood.

Today, I am inclined to believe what some of my constituents have said in their letters, and I have no doubt that other hon. Members have received similar letters. I have received one that reads: As a small newsagent and tobacconist the position seems very serious. Large stores have started selling cigarettes at the same price I purchase them, and while papers offer a better margin of profit, this is offset by a loss on unsold copies, cost of books and news bags and newsboys wages. With my rent increased threefold and rates doubled in the fifteen years I have traded here, you can well see the position I will be in. Should the small shop be forced to close, then the public will not only lose a personal service, but also the opportunity to buy when large stores are shut. That letter briefly sums up what so many of us must feel, as responsible representatives of their constituents, is the possible fate of a large number of extremely worthy, hard-working and efficient people.

I should say that efficiency amongst the small shopkeeper population is probably much greater than we find when we go to the large stores. I have not the slightest doubt that the small shopkeeper, particularly in the news agency and tobacconist business, works very hard for very long hours, and very effectively, taking a very small margin of profit on price-maintained goods.

The Minister has spoken as though the margins allowed under resale price maintenance are large. That may be so in the case of certain goods, when, surely, the right course is to inquire into the class of article, but these newsagents businesses, these tobacconists' businesses, and the businesses of licensed victuallers, operate on margins of as little as 14 per cent. or 17 per cent.—

Mr. F. A. Burden (Gillingham)

Is the hon. Lady aware that the gross margin return on a packet of cigarettes is 10 per cent., and that it is about 9.5 per cent. on pipe tobacco?

Mrs. Corbet

I should know those figures, but I have not sought to get out detailed figures as I thought they were well known to the House. My argument is that over a very wide section of the resale price maintenance sphere there is not a very large margin of profit. A good many shopkeepers would prefer it if they did not have to answer demand created by advertisements. They would prefer to sell other articles, which are not protected by resale price maintenance, because they could get a larger margin of profit, and such margin of profit as they could extort from their customers in the case of some unscrupulous traders.

The margin of profit is low in many cases and were it to he cut as it might well be by traders operating under entirely different conditions probably in large premises employing many workpeople and operating in centres of population where there are great opportunities for trading, the small shopkeeper would suffer badly. Small shopkeepers do not operate in that way as a rule. They have the less good positions and they do not attract the large number of customers necessary for the large turnover which would allow prices to be cut. If they find that the prices of certain staple articles which they sell are being cut by the larger stores and supermarkets, and they seek to retaliate by using similar price-cutting, they find that they have undermined the whole or the larger part of their profits and they are not able to continue in trade.

The House is well aware that there is not a bottomless pit of purchasing. People will buy as a rule only what they want. The result is that if the supermarkets take a large proportion of the trade there is only a small proportion left for those people who are not in a favourable position geographically or because of some other circumstances to compete with the larger shops.

Mr. Geoffrey Wilson (Truro)

I am trying to follow the hon. Lady's argument. The gist of it seems to be that she is expecting a large diminution in the numbers of traders. Would not that be covered by the exception provided in Clause 5(2,b) and would not the manufacturers then apply for an exemption in that case?

Mrs. Corbet

I thank the hon. Member for that useful point. I hope that that is what the courts would decide, but we do not know what they will decide and neither will the poor shopkeepers know.

There will be a period of intense agony for the small shopkeeper. There will be the greatest disadvantage for him in that intervening period, inasmuch that if it were necessary for him to dispose of his business he obviously would not obtain the price for it that he would have obtained before the Bill was implemented. This is a direct loss to him. It might be necessary for the House to look at the question of compensation for such hardship, just as many hon. Members would like to compensate shopkeepers who are badly hit by the clearance operations which are being carried out in so many parts of the country at the moment.

I should like to draw the attention of the House to the position of many shopkeepers who have bought their business and have laid out their capital. Tobacconisus lay out a great deal of capital to pay Government tax. This is unremunerative capital which in my view ought not to be borne by them at all. They have not only done that but they have put a life's work into the business and have possibly no other trade to which they can turn if they lose the business.

I do not claim to be an economist. All I claim to be is someone who once studied political economy more or less on her own at a time when all that could be taught was the merits of competition. Those days have gone. Now, we do not seem to be living in a time when free competition is operating at all. We have to pay architects certain fees according to the price of the building that is being erected, and even if the fees go up in between times because the prices have gone up we have to pay the architects more money although they have not done any more work. Wages, salaries and payment for services are governed all round and it looks as if retail trading is the one field where there is to be intense competition and the worker is not to be entitled to a fair day's wage for his over-fair day's work.

I look with some dismay upon suggestions made by some people that the remedy is to allow the small shopkeeper to open his shop all the hours of the day and night. This may be all very well for those who have never worked in these shops. I have, and my husband did. I remember a time when we were never free in our sweet shop until 9.30 at night and it was necessary to work on Sunday. I had to attend the ice cream-making machine and do my knitting at the same time. I was glad when opening hours were restricted, when the war came.

How wrong it is to expect this of people who are operating shops and businesses where today they cannot get any help. People will not come into these businesses because of the hours and because of Saturday working. It is wrong to expect these people to open their shops for long hours and deprive themselves of the recreation and leisure to which every human being is entitled.

I view with dismay the abolition of a system which introduced rational planning into business and which had the merit of dealing with cut-throat competition which hitherto had reduced the industries of the country to despair. That rational system had certain merits. The trader could rely upon a certain margin and could be fairly sure of selling the goods that he stocked. The trader was prepared to order regularly all the year round and this kept the wheels turning in the factories which produced the goods.

I notice that it is claimed by the Motor Agents' Association that in America, in the absence of our system of resale price maintenance, car factories are sometimes closed for several weeks because the retailers will not hold the cars in stock, as they never know what kind of price they will get for them. This is a very serious state of affairs. It has not occurred in the motor trade in this country, and the system which we have here has, in fact, been a great help to the industry with its giant export programmes. The fact that the industry can rely on a good, solid, planned home market has made it easier to venture into the more difficult and hazardous business of selling abroad.

These are arguments which we cannot afford to ignore. They are arguments which ought to be carefully examined industry by industry. I hope that the House will make sure that the Bill does not do any damage to the good features which can be shown to exist in the system of resale price maintenance. I shall not vote against the Bill, for the reasons given by my right hon. Friend the Member for Battersea, North (Mr. Jay), but I hope that I shall be able to assist in shaping it so that when it finally emerges, it will not harm the worthy people to whom I have referred or the important interests in this country which have been maintained under the present system.

6.31 p.m.

Sir Lionel Heald (Chertsey)

I firmly support the Bill in principle and, of course, I must, therefore, firmly oppose the Amendment. Before giving my reasons for so doing, I shall, if I may, comment on the speech of the hon. Lady the Member for Peckham (Mrs. Corbet). I cannot hope to follow her in her eloquence, or her knowledge and experience of retail business, but I feel that it would be quite wrong not to say a word or two on the topic which she has raised.

I have certain reservations about particular provisions of the Bill, notably Clause 3, which I believe ought to be given, and can be given, much stronger teeth. I agree with the hon. Member for Ogmore (Mr. Padley) that consideration should be given to the question whether some sort of conception of unfair competition could be introduced in the Clause. It has been done in several other countries, in some cases with success. This is a difficult thing to do. It is a conception which is rather foreign to our law, but, after all is said and done, a lot of what we are talking about now and have been talking about for some years on this subject would have been considered foreign to our law a little time ago.

On Clauses 3 and 5, a great many right hon. and hon. Members have received, as I have, representations from traders individually and from organisations and groups representing them. I know that many of my hon. and right hon. Friends will agree, irrespective of our views about how we should approach this Second Reading, that we should acknowledge the very courteous and moderate terms in which, almost without exception, our correspondents have expressed themselves. Their anxiety and concern is very natural. One thing we can all agree upon is that it is our duty in the House to do what we reasonably and properly can to ensure that, where they have a real case to justify the continuance of the present system, there will be a fair and adequate opportunity to put it forward and have it properly and judicially tested by the Court. This is a matter which will have to be considered when the Bill goes to Committee. I have very great sympathy with the point of view expressed by the hon. Lady, and I am sure we all approach the matter in that spirit.

Further than that, however, I cannot go. Our future in this island depends on our ability to compete in the world of today and of tomorrow. If our national efficiency does not increase, and increase rapidly, no business of any kind in this country can survive, however well its home prices may be protected. I adopt at this point one or two sentences from a leading article in yesterday's Daily Telegraph, a great journal with which I do not always agree and which has very seldom agreed with me.

On this occasion, however, I adopt what it says as being, I venture to think, an admirable statement of the basic principle with which we are concerned: The decision to abolish R.P.M. is not an isolated act of policy. It is part of a broad strategy of structural reform in the British economy…Increased powers for the Monopolies Commission and more effective checks on price-fixing…are part of the strategy. So, too, are the growing activities of the National Economic Development Council. In my view, we must look at the matter in that context. Although we may have to harden our hearts against some of the very moving appeals we receive, we must try to look at the matter from a wider standpoint.

We know what the present position is, but I think that it is worth while getting it clear in our minds again, particularly after the speech of my hon. Friend the Member for Rugby (Mr. Wise). My hon. Friend covered a good deal of ground in moving the Amendment, but he did not deal very much with the basic principles of the Bill, and, since we are now dealing with the Second Reading, there is no harm in talking a little about the basic principles.

At present, under Section 25 of the Restrictive Trade Practices Act, 1956, any and every manufacturer has an unlimited legal right to prevent any competition whatever among retailers in the price at which his goods are sold. I fully support my right hon. Friend the Secretary of State for Industry and Trade in his insistence that we cannot allow this state of affairs to continue in 1964. One has to remember that this is not a matter of individual contract, as the right hon. Member for Battersea, North (Mr. Jay) pointed out. I found myself in agreement with most of what the right hon. Gentleman said, except when he presented the "Gentleman from Whitehall" as a friend of the little man. I thought that that was more like a modern version of "Red Riding Hood and the Wolf".

The right hon. Gentleman was quite right to point out that this is not a question of individual contract. Individual contract will not be interfered with. It is most important that this should be appreciated. The system of approved and regular agency will be maintained. This, of course, can be of great assistance in the situation alluded to by the hon. Lady the Member for Peckham, when she spoke about the state of affairs in America when motor car companies were forced to cease production for a time. This situation can be met by a system of approved and regularly constituted agencies, and there is no question of affecting this in any way. A number of traders have inquired of me what would happen, and I was glad to hear my right hon. Friend make quite clear in his opening speech that no change was intended. We can be quite sure about that.

What we are concerned with here is the existence of a legal right which goes right outside any contractual relationship and covers third parties who know nothing of the manufacturer's business. In the Unite States, these people are known, rather picturesquely, as "non-signers", which is really self-explanatory. We should contrast this with the con- ception of a monopoly. A monopoly is a state of affairs which is not illegal and does not require any particular law to deal with it until an abuse arises.

No one can deny, and no one has attempted to deny, that there are already instances of whole classes of goods where r.p.m. has been swept away by the force of circumstances and no one seriously has suggested that it should or could be restored. There are also certain cases of r.p.m. in which, although some people want to retain it, the Monopolies Commission, an independent body which consists of experienced people from all walks of life, reported that the system in force was definitely against the public interest and recommended most strongly that it should be abolished.

Take, for example, the electrical accessories and wallpaper cases. The Government are faced with the position that reports have been made and that there is a widespread public demand that action should be taken. The Government have no power whatever to take action, and they can have no power to do so unless and until Section 25 of the Restrictive Trade Practices Act, 1956, is drastically amended. An ad hoc Act of Parliament to deal with a particular case—for example, electrical accessories —is obviously an impossible and inconceivable way of dealing with the matter. Can anyone seriously suggest that the Government should not be able to deal with those cases which are crying out for attention? That is what we should be suggesting if we did what my hon. Friend the Member for Rugby is asking us to do in refusing to give the Bill a Second Reading.

Mr. Burden

Surely my right hon. and learned Friend is quite wrong. The Bill will have no effect whatsoever on the manufacturers of wallpaper or on any other monopolies which exist at the manufacturing end. This Measure deals entirely with control at the resale level, and does not impose any control elsewhere.

Sir L. Heald

That is true, but the reports with which we are concerned deal with r.p.m. and action cannot be taken in respect of them. In one of those cases—I have the report of it, but I should not delay the House by refer- ring to it—it was mainly on the question of resale price maintenance that the Monopolies Commission took its strongest view. The fact remains that there is no power to deal with these cases today.

I am glad that my hon. Friend the Member for Gillingham (Mr. Burden) intervened, because he has shown that it should be pointed out to those who contemplate voting against the Bill or abstaining from voting that what they are doing is saying that nothing should be done at all. The argument that we should not do anything, until we can do everything, is not one which I am prepared to accept. The House of Commons never has accepted it. We proceed by stages in these matters.

Once we accept in principle that the existing unlimited legal right of manufacturers to enforce prices and thereby to interfere with the freedom of third parties in their contracts should go but that individual cases must be considered with a view to their being exempted, it is inevitable that the individual should have to make out his case. It cannot be done in any other way. The individual is the only man who knows the circumstances. He is the only person in a position to bring them forward and to make the case. All that the Registrar can do is to say, "Here are the general circumstances, the general principles, the general position. Why do you say that you should be entitled to continue this system?"

The statements which have been made by organisations—they have been sent to me and I am sure to other hon. Members—are, in effect, enshrined in Clause 5. I do not believe that this so-called onus of proof controversy is very serious once one understands the position.

Mr. Maxwell-Hyslop

My right hon. and learned Friend has said that that is all the Registrar is able to do. Alas, it is not, because under Clause 6(4) the Registrar can gather together any number of applications or decide their order and completely prejudice the subsequent judgment of the Court by his unilateral and unchallengeable right to arrange the exemption applications in any order he chooses.

Sir L. Heald

That is a matter which can be discussed in Committee, but I do not think that it affects my argument.

At the moment, I am dealing with the so-called onus of proof. This applies in every case in our law when an individual claims exemption from some general rule. It is absolutely elementary. When it is alleged, for example, that something has been done "without just cause or excuse", the person concerned must show the just cause or excuse. It does not mean that he cannot do it. In a very large number of cases he can.

The same applies in the case of a man who is liable for damages "unless he proves", as the Statute says, A, B, C or D. There is nothing unusual in that. He is the man to show that his is an exceptional case. It is not a question of proving a negative. On the contrary, one is doing only the normal thing. The person who affirms a fact is the person to prove it. I think that it may be necessary to give further consideration to paragraphs (a), (b) and (c) in Clause 5(2) and it may be that one addition or more should be made. But these are matters essentially within the knowledge of those concerned. I believe that in many cases people can put forward their case.

Even if one said that, in the first instance, the onus should be on the Registrar, all that he could be required to do would be to put forward the general case. Then, in accordance with our normal process, the onus of proof shifts to those on the other side for them to show the contrary. It should be noted—this has not been mentioned so far—that the proposed wording of Clause 5, which may be the subject of considerable discussion in Committee, is substantially different in at least two important respects from that of Section 21 of the 1956 Act.

The first is that Section 21, which has been criticised, requires the court to be "satisfied", in these words: …a restriction…shall be deemed to be contrary to the public interest unless the Court is satisfied… That is a very strong onus which has been criticised a great deal. Those of us who have had something to do with it know that in a large number of cases it is absolutely impossible so to satisfy the court.

The language in the Bill is different. The Bill says: …if it appears to the Court that a certain thing has happened, paragraphs (a), (b) and (c) will operate. That is a much less heavy onus. In fact, it is hardly an onus at all. It is much more the wording of what would be the result of an inquiry, rather than on the lines of the very strict burden of proof in the Restrictive Trade Practices Act. Section 21 requires proof of "specific and substantial benefits". Clause 5 does not use that most unsatisfactory phrase at all. It puts the matter in much more practical and comprehensible words.

Returning to the question of principle, something is being said in the House, and a lot has been said outside it, about what has been or is being done in other countries in this matter. I doubt how far it helps us very much to know what people have been doing in other countries. The facts and circumstances are very different and we have to solve our own problem as we meet it. If, however, we are to consider at all what is done in other countries, we must be careful to see that we have the facts right.

I have with me—[HON. MEMBERS: "Hear, hear."] I am glad that my hon. Friends are in agreement, because I am referring to a pamphlet which has been sent to every hon. Member by an organisation called the R.P.M. Maintenance Co-ordinating Committee. Members of Parliament have no right to complain at anything that is sent to them, but they are entitled to look the gift horse in the mouth and carefully examine the soundness of its teeth.

When one does that and looks at the teeth of the pamphlet, the result is such that for a moment or two I should acquaint those hon. Members who do not already know it with the position. On pages 7 and 8, the pamphlet deals with the position in the United States. It describes the so-called Fair Trade Act, under which, it says, forty-six individual States passed legislation in the depression of the 1930s. It is quite short and it goes on as follows at the top of page 8: In the majority of these, R.P.M. is fully enforceable and at the present time the United States Congress is considering a Quality Stabilisation Bill which will, if passed, make R.P.M. a federal law. According to The Times of 11th February, 1964, 385 members out of 435 in the House of Representatives are wholly in support of the Bill. The legislation has been approved by a Committee of the House and, writes The Times, will soon be approved by the appropriate Senate Committee. Reading that, anyone would imagine that it is just about to become law in the United States. The article from The Times, however, had been quoted with considerable economy and the House should know what The Times article said which is not quoted. It first said: The United States Congress is considering the idea of enacting a national retail price maintenance Bill. President Kennedy discouraged the effort and President Johnson is equally opposed to the legislation…The rallying point for Senator Humphrey and his many followers… is the purported plight of the small shopkeeper in the United States…small merchants claim that their survival is in doubt. The fact, however, is that various lobbies of manufacturers and retailers have been seeking national price maintenance since 1914…They met with no success until the 1930s, when they persuaded Congress to permit the states to establish price maintenance systems. Thereafter some 45 States adopted price maintenance laws as stated in the pamphlet.

The Times article goes on, however, to say that: these had a short life and at present only 23 out of the 50 States still have them. It goes on: Price maintenance advocates in the United States have always cloaked their crusades with euphemisms. 'Fair trade' was their slogan in the past. The new term is 'quality stabilisation'…Congress paid little attention to the 'fair trade' or 'quality stabilisation' lobby until 1962. At that time a group of influential manufacturers joined forces with the National Association of Retail Druggists and set out to influence Congress. Senator Humphrey, whose father was a pharmacist, enlisted gladly in the lobbying effort and wrote the legislation now under consideration. He…. began a long effort to bring President Kennedy to his point of view. The President was not won over but agreed to maintain an open mind…. With that accomplished, Senator Humphrey and others in Congress increased their efforts.…. The Administration, however, has not been converted. The Defence Department contends that price maintenance could add many millions of dollars to military costs. The Justice Department says that price maintenance is a violation of anti-trust principles, that it would destroy retail competition, and that it would add perhaps 15,000 million dollars a year to consumer costs. President Johnson in his economic message last month advised Congress to 'resist new steps to legalise price-fixing where competition should prevail'. Unfortunately, space, no doubt, did not allow that to be included in the pamphlet.

The pamphlet ended by saying: The legislation has been approved by the appropriate House Committee and will soon be approved by the appropriate senate Committee. But the correspondent of The Times goes on like this: The lobby has, however, encountered one obstacle which it had not expected. The highly conservative Rules Committee must approve the legislation before it can be voted upon in the House. The lobby had expected to get this approval as a matter of course. For reasons not yet explained the Rules Committee has put the Bill aside and it may never emerge. In this event, the price maintenance crusade is dead.

Mr. Wise

Has anybody who opposes the Bill rested his case on that pamphlet? If not, why has my right hon. and learned Friend quoted it except with the idea of creating prejudice?

Sir L. Heald

No, that is not the reason. It has been sent to every Member of the House of Commons. I speak as a Member of the House and I am not in the least interested in my hon. Friend's views on this point. We in this House are entitled to protest if a public relations organisation which is running a campaign on behalf of the resale price maintenance organisation sends us a document of this kind which is misleading.

I did not want to go on for more than a moment, but my hon. Friend has tempted me. The document goes on to deal with the Common Market and it states, on page 13: In the countries of the Common Market other than France resale price maintenance is completely legal and enforcible. That statement is quite wrong. It does not deal with Germany, and there are others. Holland is just on the point of introducing a Bill. I must pay tribute to those who prepared the pamphlet, because they at least say that in Holland, "at the moment", there is no special legislation, and that is true. It is just coming. I must not delay the House with it any longer, but that is a matter which should be brought forward.

Some of my hon. Friends may have been influenced by the pamphlet. I am sure that it was intended to influence them, because it was given great publicity and was quoted in the Press. It was said that it was being sent to every Member of Parliament and I should be surprised if, when they knew that a document like that was available, Members of Parliament have not taken the trouble to read it. When it is sent by an organisation of that kind, it is their business to do so. My hon. Friend the Member for Rugby should not object to my referring to it. At least, I did not require his permission for that and I have read it.

There it is. I do not know whether it is much use asking those hon. Friends of mine who have already declared war —it is, perhaps, not much good talking to them—but there might be others who thought that the thing to do was to sit on the fence about the Bill. I earnestly suggest to them that they should not do so and that they should support the Bill.

6.58 p.m.

Mr. W. A. Wilkins (Bristol, South)

I have not based my judgment, and I do not propose to do so now, on the document which has been quoted by the right hon. and learned Member for Chertsey (Sir L. Heald). This is a more down-to-earth business than dialectical arguments such as we have just heard. There was only one passage in the whole of the right hon. and learned Member's speech with which I was in sympathy and that was when he said that consideration should be given to the possibility of unfair competition.

I ask the House to accept that my attitude to the Bill is dictated by what I regard as considerations of justice and fair play to ordinary people who make their livelihood in our small shops.

When I listened to the right hon. Gentleman today the apprehensions with which I viewed the Bill earlier considerably increased. I thought that I noticed a number of contradictions in his speech, not the least of which was his claim that this was an effort to produce stability of prices. I have a vivid recollection of the cut-throat price competition two or three years following the end of the war. How that can be interpreted as contributing to stability of prices I do not know.

If the Government are to let these people run a free-for-all, obviously we will not have much stability. How can a variety of prices in the High Street contribute to stability? The right hon. Gentleman asks for stability of prices yet says that, with the abolition of resale price maintenance, there will be differing prices That is not stability but a free-for-all.

The Minister made one thing clear. He said that the legislation would not be imposed until after his party had been returned at the General Election. That can only mean one thing—that the Conservative Party is running this as an election gimmick. Can he offer any other explanation?

Mr. Heath

The hon. Gentleman must have misunderstood. I was asked about legislation on monopolies, mergers and restrictive practices. It was to a question on that subject that I replied in that sense and not on resale price maintenance legislation.

Mr. Wilkins

I beg the right hon. Gentleman's pardon. I had misinterpreted what he said. As we were discussing the Bill, I got the impression that he was telling the House that it would not be enforced until after the party opposite was returned at the General Election. I thought that I was fairly entitled to adduce from that that this was an election gimmick.

My observations on the Bill are of a somewhat more "earthy" character, for they deal with the people who are involved in the implications of the Bill. My right hon. Friend the Member for Battersea, North (Mr. Jay) said that we should be attacking manufacturers' prices and this is the basis of what I want to say.

I have a friend who is in a one-man business. Actually, he employs two assistants, but, technically, it is a one-man business. It is a small ironmongery shop. [Laughter.] I can understand those interested in multiple shops not wanting to know about the difficulties of the small man. We saw, when the Bill was published, how multiple shops immediately began cutting prices and how their shires increased in value on the Stock Exchange.

I was conerued—still am—as, I think, instinctively most Englishmen are concerned, to see that the little man is not battered to death by the big fellow. As a party, we on this side have no political interest in this. For us, it is a matter of justice. That is the only basis on which we can argue.

I want to put on record two instances which indicate the kind of action we should be looking for in the future on price maintenance. There is a well-known mop on the market. I was talking to my friend about resale price maintenance and I chided him because he had not written to me opposing the Bill. At first, he said that he was not troubled about the issue and did not care which way it went. But, as an afterthought, he said that he was not sure after all. He pointed out the mop and said that he retailed it at, I believe, 30s. 6d. and bought it through the wholesaler at 20s. 6d.

He added that one of the great multiple stores, buying at the rate of 50,000 a time, had been able to get the mops at 13s. 6d. each through the wholesaler and had retailed them at the same price he paid the wholesaler—20s. 6d. I asked what the foundation for this information was. He said that in a High Court action judgment was given for the manufacturer against the firm which was selling this mop at the price which an ordinary one-man business had to pay.

The second instance is perhaps even more telling. It concerns a well-known brand of paint. He told me that twice within six or seven months there had been an increase in its price. He had first received notice from the manufacturer that the price of a quart tin must go up 6d., of which he and the manufacturer would get 3d. each. Within three months the price was again increased by 3d., this time the manufacturer taking 2d. and leaving ld. to the retailer. Thus, my friend had to accept an increase of 4d. within a short time. But he told me, "I was already getting 4s. 3d. profit on each quart tin and I was perfectly happy with that." [Interruption.] I am trying to impress this on the Minister. If he knows that this sort of thing goes on I cannot understand why he has drafted the Bill as it has been presented to us.

The Government should be launching its attack on the manufacturing end and that is my only criticism of the Bill. We are attacking at the wrong end—the small man. We are not going for the bigger fish, the manufacturer.

Another thing which hits the smaller man is discounts. Huge discounts are obtained by the juggernaut organisations of multiple stores which put the small man at a grave disadvantage. I am only speaking now simply from what I term the natural reaction one normally has when one sees the small chap having to struggle against a much bigger organisation. I believe that the Government are misdirecting their attack. They should be going for the monopolies. They should be going for the big fish—not the little fish in the big pond!

Mr. Heath

I have listened with great interest to the hon. Gentleman. In the Bill we are dealing with the manufacturer. It is the manufacturer who is enforcing on his friend the price at which he must sell these goods, though he himself does not want to charge those prices. The Bill will mean that the manufacturer will not be able to do that, so it is the manufacturer that we are tackling. The Bill will give to the retailer the freedom to sell at any other price.

I fully realise that small shopkeepers are at a disadvantage in obtaining discounts, and that they feel strongly about it, but I do not think that the hon. Gentleman would suggest that these large discounts should not be passed on to the consumer. I think that the answer lies in the organisation of a number of small retailers so that they can get the advantage of large buying and discounts.

Mr. Wilkins

But that is only one instance. I am glad to find that that provision is there, but there is nothing to prevent the manufacturer from Increasing his prices and passing on the cost. It therefore goes back to attacking monopolies and restrictive practices in industry.

If and when the Bill becomes operative, and the larger organisations are set free and are able to cut their prices in what is supposed to be a free market, there will probably be many millions of people who will take advantage of that and who will shop where prices are down. That does not appeal to me as being a fair method of trading.

One of the things which grieves me more than anything else about what I would call the ordinary workers is that so many of them are good trade unionists only when they are earning their money and not so good when they spend it. They want all the advantages of trade unionism for their own wages and conditions, but they will run to the nearest cut-price shop to buy their goods, paying very little regard to what is happening to the man serving at the counter, or to the worker at the manufacturing source.

If we have a vicious cut-price war, while it may not have the effect of reducing the standard of life of workers in the distributive trades, it is an almost certain bet that it will restrict any possibility of their making progress in better conditions and better wages, because firms will not be able to meet such additional charges. I appeal to my fellow trade unionists to think of their fellow men and to have some regard to seeing that they have the same conditions and standard of living which they would wish to have for themselves.

This battle should be fought at the monopolies and restrictive practices end. It is all very well for the Minister to give us a White Paper on Monopolies and Restrictive Practices, but I have quoted before—and I can produce the document—what the Conservative Party in 1947 called the Industrial Charter, in which hon. Members opposite said that Conservatives hated monopolies. They went on to say in so many words that they would destroy them. It has taken them 17 years to get around to it. There have been innumerable reports from the Monopolies Commission, but in only three instances has any action been taken, and then it has been only slight. It is there that the battle should start and not at the small shopkeepers' end of the distributive process, for the small shopkeeper has probably built up his business over the years, putting much time and work and energy into it, and now sees the possibility of all his work disappearing.

I do not believe that this is a matter of political consideration for us. It is a matter of justice and equity, particularly equity, for the smaller man.

7.15 p.m.

Sir Hugh Linstead (Putney)

The speech of the hon. Member for Bristol, South (Mr. Wilkins) was particularly interesting because it brought out a point which has given me the greatest concern throughout the discussions of the Bill during the last few weeks. It is the distinction drawn by the Government between those matters which are dealt with in the White Paper and this subject of resale price maintenance, with which the Bill deals.

My right hon. and learned Friend the Member for Chertsey (Sir L. Heald) spoke of the necessity of regarding the Bill not as an isolated matter, but as part of a grand strategy. I could have understood that if all the matters dealt with in the White Paper and the Bill had been dealt with in a Bill or in a White Paper. Much confusion and difficulty has been caused by the fact that they ale being dealt with in separate ways.

I have reluctantly concluded that I shall not be able to support my right hon. Friend in the Division Lobby and that I shall have to vote against the Second Reading of the Bill. This is only the third time in 22 years in the House that I have voted against my own party. I feel that the abolition of resale price maintenance will not achieve the objectives which my right hon. Friend has in mind and that, in so far as it does and in so far as it reduces retail prices, it will do so at the expense of the independent trader. I can see nothing but injustice in taking out of the pockets of the independent trader sums of money which are a substantial part of his income in order to bring about what will probably be an extremely small if not insignificant reduction in, for example, the index of retail prices.

The problem is that retail distribution is not home geneous and is not a simple unified structure. Each trade and each activity is different, and to try to deal with the whole spectrum with one weapon is almost to guarantee inequity and even injustice.

As the House knows, for all my working life I have been connected with pharmacy, although not with the commercial side, and it seemed to me that I ought to try to use my association with pharmacy to discover in that limited field what were likely to be the effects of the abolition of resale price maintenance. There is a tendency to discuss the subject in a vacuum, to gaze into a crystal ball in order to determine whether certain things will or will not happen. I therefore went to the National Pharmaceutical Union, which represents proprietor pharmacists, and about a fortnight ago I asked it to set up a small working party and to let me have a report on the effects which it foresaw following in their sector of distribution if this Bill became law.

I had the report two days ago, and if the House will bear with me I should like to quote from it. I shall not go into great detail, but I think that hon. Members will find it instructive to see how the Bill is likely to hit one group of people. The 1961 Census of Distribution, which is a public document of course, shows that 30 per cent. of those practising pharmacy had a turnover of less than £10,000 a year. That is extremely small. Forty-seven per cent. had a turnover of between £10,000 and £20,000 and 23 per cent. a turnover of more than £20,000.

The working party took a typical pharmacy with a turnover of between £10,000 and £20,000. It found that one-third of that income came from the National Health Service and two-thirds from sales over the counter. Sixty per cent. of the counter sales are price-maintained articles. Whether that be a good thing or a bad thing, that is the situation. A total turnover of £15,000 a year gives a net profit or about 7.5 per cent.

Let us suppose that the Bill becomes effective, and that price maintenance disappears in this sphere. If the result is a reduction of only 1d. in the 1s.—and if it is not more than that the operation is scarcely worth performing—that will reduce the gross profit by about £500 a year, and it will reduce the net profit by the same amount because the overheads will continue. If the effect of the abolition of r.p.m. is 2d. in 1s. it will reduce the net profit to £129 a year. That is with a turnover of £15,000, and one asks what will be the position of the 3,350 pharmacies with a turnover of less than £10,000 a year?

Because of competition, on average, every year during the last seven years, 97 pharmacies have gone out of business and from the figures that I have quoted one can see that the effect of the abolition of r.p.m. in this important field could be to accelerate the tendency represented by that figure of 97 pharmacies a year, with a serious effect on the National Health Service and the general service that pharmacists give.

My right hon. Friend has been very sympathetic in the representations that I have made to him, and I know that his answer is that Clause 5 has been put in the Bill precisely for that purpose. I accept that he has tried to meet this problem by putting in Clause 5, but counsel has already advised that, judging by the practice of the Court in its other capacity, he can give no sort of assurance that they will in fact be able to get through the gateway of Clause 5.

What we tend to forget, when we talk about the possibility of going to the Court under Clause 5, is that there is bound to be a long queue of applicants waiting to go to the Court, and that during the months, and perhaps years, that they are waiting to have their cases called the whole climate of opinion will change. Manufacturers will shrug their shoulders and say, "This is not worth waiting for. We will change our trading policy", and by the time these people get to the Restrictive Practices Court and their cases are determined, their success will be valueless because the manufacturers may well have changed their policy and not desire to continue to maintain prices.

During the Committee stage of the Bill I shall table, among others, three Amendments, which I should like to mention now. They are Amendments which, I hope, will do something to make possible what I believe my right hon. Friend and probably a considerable number of hon. Members on both sides of the House wish to achieve. I wish, first, to amend Clause 2, which compels a manufacturer to supply a retailer whom he may not want to supply.

I do not think that when one is dealing with medicines a manufacturer should be compelled to supply a retailer—[Interruprion.] If I am wrong, I shall be glad to be corrected, but my interpretation of this Clause is that a retailer is in a position to require a manufacturer to supply him with goods. If I have misinterpreted the Clause, so be it. I shall have to examine it again. I think that a manufacturer must be free to protect his goods by not being required to sell them to any retailer irrespective of questions of price cutting.

I think that the escape provisions in Clause 5 ought to be enlarged. The conditions do not seem to me sufficient to allow those whose livelihood includes a large element of services, or whose existence depends on the sale of a wide range of goods, and not on a limited range—both meritorious classes of distributors—to get through the gateway or even to give the Court grounds for considering them.

The broad principle of where the onus is to lie has given great concern to my hon. Friends and myself. My right hon. Friend's argument is simply that he cannot alter the onus, but the only reason that he has given for that is that the Government feel that the onus should be where it has been placed in the Bill. I cannot help saying, in reply, that, in 1956, Parliament decided something quite different. I see no justification for saying that we are necessarily right in saying one thing in 1964, when we said something completely different in 1956. I do not believe that we shall be able to persuade the ordinary retailer, the ordinary man engaged in commerce, that he is getting a square deal if the onus remains where the Bill proposes to place it.

I also agree with those who have criticised the loss-leader Clause. I am sure that its weakness springs from the fact that the draftsman took far too literal an interpretation of the words "loss-leader". We shall have to devise a way of making it clear that loss-leading is not selling at less than the cost price, but is selling goods at a low price to attract customers in the hope of selling other goods. There is no doubt that today the loss leader is used not for a purpose of selling a particular article, but for the purpose of attracting people into the shop so that other goods may be sold to them.

I come back to my preliminary point, which is that the great weakness of the Bill is the confusion between the monopoly and restrictive practices element in the White Paper and the resale price maintenance element in the Bill. This morning I received from the owner of a grocery, cigarette, tobacco and confectionery store in my constituency a letter which, I think, puts the mystification of the small retailer in as clear-cut a form as it could be put. It is because of that apparent injustice, which this letter reflects, which the Bill is likely to produce for this type of trader, that I feel unable to support my right hon. Friend.

The letter reads: To be fair, the Bill must have in mind the need of the greatest number of people and this, of course, means the public. If the abolition of r.p.m. does benefit the country as a whole, then I must be in favour of it, but the abolition must be complete and it must be just. Just, however, it will not be, for it seems that shopkeepers alone are to be singled out for attack. Public transport is 'price maintained', for no competition is permitted. If r.p.m. is abolished, will 'pirate' buses once again be allowed to serve the public? The product which trade unionists 'sell' to make a living is their labour, but they are allowed to agree price maintained' rates of pay and prevent 'price cutting' even to the extent of striking. Shopkeepers, on the other hand, who sell goods to make a living are not to be allowed to agree prices, although they are forced to pay 'agreed' wage rates to their staff. That letter may contain a good deal of special pleading, but that sort of sentiment is common among the small shopkeepers, ant it explains why they feel that they will not be getting a square deal if the Bill becomes law.

7.30 p.m.

Mr. Arthur Holt (Bolton, West)

I am glad to follow the hon. Member for Putney (Sir H. Linstead), who appears to have polished up his argument since he took part in a similar debate on 17th January. With respect to the hon. Member for Rugby (Mr. Wise), I believe that the hon. Member for Putney put the core of the argument for those who are against the abolition of r.p.m. He showed that they think that, if r.p.m. is abolished with a few exceptions the small retailer will be driven out of business. Rather than that should happen they wish him to be given a concealed subsidy provided by the rest of the retail trade.

The hon. Member for Putney started by saying that the Minister's objectives would not be achieved by the Bill. He said that if the Bill brought down prices it would be at the expense of the small retailer and that the overall reductions would be so small, in terms of the retail price index, as not to be worth the trouble. He gave us some interesting statistics about the pharmaceutical retail trade, but in the end his argument simply amounted to saying that the small retail shops would go out of business unless r.p.m. was continued for them.

That is a quite proper and reasonable stand to take up. If there really was a danger that nearly all our small retailers would go out of business, many people who are now in favour of the abolition of r.p.m. would have more than second thoughts. Although many of the small retailers will be marginally affected—and they are being affected now, as the hon. Member said, under r.p.m., since 97 are going out each year—I am sure that the hon. Member would not wish to freeze the distribution system for ever. Changes are bound to take place. If we do not take an exaggerated view of the effect upon the small retailer the case for removing r.p.m. is very much stronger.

It is not so much that we can be certain that we are going to have many price reductions of a significant nature; the important argument in favour of the abolition of r.p.m. is surely that it enables us to obtain the maximum flexibility in the distributive trades, so that such new techniques as appear from time to time can be fully used and that such reductions in cost as a result can be passed on to the public.

I can well believe that the price of some articles may rise. This is quite likely in the case of some chocolate products, because the margins are already extremely small.

Mr. Burden

The hon. Member has made an important point. The whole question revolves round the margin averages. In other words, a firm's buyers or accountants may tell it that it must make a certain margin on its turnover and if it drops on one article it must average its margins up by increasing the price of another. Therefore, the Bill will have no beneficial effect.

Mr. Holt

Some products are distributed under r.p.m. with very bare margins to the wholesaler and retailer, but there are certainly others which are distributed with very large margins. If anybody insists, I am willing to accept that some products may rise in price. But it is obvious that the prices of many others will be greatly reduced.

But we should not decide this argument on the price element. On balance, the overall result should be a reduction in prices, although I agree that it is marginal. I am much more concerned to achieve flexibility in our distribution methods, so that we can take full advantage of the improved techniques that now exist, or will come about in the near future.

The Government are in their present difficulty because of the protective climate that we have had ever since the 1930s. They must take their share of the responsibility for that. Under the situation that existed in the past, when there was a total shortage of demand, many businesses not surprisingly rushed to adopt methods of protection. The Government aided and abetted them by the Import Duties Act, but by doing so they made the situation worse and not better. Later, many people realised that what was required was to increase the total demand.

But the old protective attitudes still carried on. The Government have done nothing like enough in making a drive to change the present anti-competitive atmosphere to one of vigorous but fair competition. But the abolition of r.p.m. is very small beer considered in the context of what the Government can do. This step will probably have less impact on prices than other policies that might just as well have been adopted.

I do not know where the Minister gets his information that 40 per cent. of the products bought by consumers are retail price maintained. This is a new figure for the House. I agreed with the figures given by the Parliamentary Secretary in a previous debate, which included services, but I should be interested to know where the right hon. Gentleman's figure comes from. It may or may not be accurate. As a matter of reality I should think that it is inaccurate, because many products—motor cars, television sets and the like—qualify for an allowance when they are traded in, and r.p.m. goes by the board, although it still exists in theory. I should be surprised if r.p.m. covers 40 per cent. of the articles bought by consumers.

I now want to turn to some of the other measures which, had the Government taken them, would have led many people to give the Bill a far better reception. First, as was pointed out by Dr. Chester recently, public authorities —this includes nationalised industries —spent 44 per cent. of the gross national product each year. His figures refer to 1962. This amounts to about £11,000 million. What are the Government doing about their attitude when they buy things? Are they removing the escalating clauses in contracts which provide that if wages or raw materials go up the price of the contract is automatically increased? Lord Robens had something to say a bout this, but I have not heard much from the Government about it.

In previous years the Government have been tackled about it, and I should have thought that a serious drive in this direction would have had far more effect on stabilising prices and forcing those who give wage increases—as we wish them to do—to see that the increases are paid from greater efficiency and not automatically passed on to the purchaser. A much more determined drive in this direction would make a considerable improvement in dealing with the problem of prices.

Secondly, a much tougher and less tender attitude should be adopted towards monopolies, mergers and restrictive practices than is shown in the White Paper. We have made our points about this and I do not propose to develop them now.

Thirdly, perhaps the most powerful weapon of all for bringing back a competitive atmosphere and holding down prices is unilateral tariff cuts. To me it is extraordinary that after twelve or thirteen years in office this Government have never, so far as I remember, used that weapon in this capacity. I hold no dogmatic view on the subject. I should be delighted were they to use it to deal with monopolies. They could have used it when the Courtauld-I.C.I. row was going on, and on many other occasions. It could have been used more widely to keep down prices over a range of manufactured goods where it was thought that competition was not effective. I should not mind had they used it in some respect and shown they rea- lised the powerful nature of this weapon. But they have not used it at all.

I wish now to deal with some of the main aspects of the Bill. It has been a mistake to insist that the Restrictive Practices Court deal with these exemptions. At the time when the 1956 restrictive practices legislation was passing through the House we had long discussions about the relative merits of courts and tribunals. In view of those debates and the experience since, I should have thought that there was a far stronger case for having the exemptions considered by an expanded or reborn—if hon. Members wish—Monopolies and Restrictive Practices Commission as it used to be.

Basically, under the provisions of this Bill the ultimate decision will still be a politico-economic decision. The Commission and its staff would build up an approach to competitive matters and views about special cases where exemption might be granted. It would provide a much more coherent plant than we shall get from the Restrictive Practices Court particularly when there is a change from one judge to another. My right hon. Friend and my hon. Friend will be puling down Amendments to cover this aspect.

Having decided that we are to have real competition, we must take every possible step to see that the competition is fair. I do not know anyone who supports competition which is patently unfair. Many techniques have developed, quite naturally, from the growth of companies and the growth of multiple shops and discount houses which did not apply thirty and forty years ago. These could have a deleterious effect on the competitive nature of business and could act against the public interest. We have to be quite open-minded about it. This is an extremely difficult problem, and I and my hon. Friends wish to produce what might be called a fair trading charter. I know this has been tried in other countries and there may be arguments about whether it serves a useful purpose. But we should be failing in our duty it we did not examine this aspect carefully during the Committee stage discussions. I hope that there will be other Amendments on the Notice Paper to see whether we can produce a satisfactory fair trading charter.

I mean exactly that, a satisfactory fair trading charter. I do not mean any inroads to be made on the main principle in this Measure, which is that r.p.m. shall be abolished and we shall have exemptions only where there should be exemptions. But, having agreed to that principle, we must examine whether some of the practices which are going on today and which may be increased when r.p.m. ceases may be effectively dealt with by the House. We shall put down Amendments to outlaw unfair discrimination in selling and loss-leaders designed to lessen competition and so, perhaps, completely to remove a competitor and deceitful pricing. If this is done, we may well end up with a Bill which would be satisfactory.

I hope that the Minister will respond and will produce some ideas of his own. We want to get this Bill much more right than we got the restrictive trade practices legislation. Had some of the Amendments which we put down to that legislation been accepted by the Government regarding the present Section 25, which we did not favour, and about the size of the Monopolies Commission and its duties, the Government would have been relieved of some of the difficulties which face them now. We shall support this Bill which we think deserves a Second Reading and which is capable of considerable improvement. We reserve our right to decide upon our course of action at Third Reading until after we have seen the response by the Government to our proposals.

7.50 p.m.

Mr. R. H. Turton (Thirsk and Malton)

Where I fall out with the hon. Member for Bolton, West (Mr. Holt) is when he assumes that in every system of resale price maintenance there is an absence of competition. If we take the example given by my hon. Friend the Member for Putney (Sir H. Linstead), in pharmacy there is intense competition between the manufacturers of the branded product and such firms as Boots and Timothy Whites and Taylors which are practising direct price maintenance. This, in some cases, can be a system which is against competition and is bad, but in other cases it might be highly beneficial to the whole community, especially to those who live in the sort of rural areas which I repre- sent. It is therefore, a matter on which it is very dangerous to come to hasty and early judgments such as I felt that the hon. Member was doing. The hon. Member illustrated the falsity of his argument by admitting that in many cases the abolition of resale price maintenance could put up the price of the article. I agree, and that is what I fear most from what my right hon. Friend is doing by this Measure.

I find myself in a very difficult situation tonight, because I do not agree with either of the two extremes. I know that many hon. Members want to speak in this debate; therefore I shall limit myself to under 10 minutes so that others may take part. I do not see how I can possibly take the view of my hon. Friend the Member for Putney, who agrees with me in thinking that there may be cases where resale price maintenance is against the public interest, yet none the less found that he could not support the Bill.

This is a Second Reading of a Measure which has for its Long Title the description: To restrict the maintenance by contractual and other means of minimum resale prices in respect of goods supplied for resale in the United Kingdom; and for purposes connected therewith. That seems to me to be so wide that it is entirely in line with my attitude on the Bill, which was summed up very well by the Prime Minister when he said, "We have decided to end resale price maintenance where it acts against the public interest." For that reason, and that being the description by my leader of this Measure, I shall certainly vote for a Second Reading of this Bill, but I am extremely worried about some of its provisions. It is very difficult when one finds that the Bill places the onus of proof on the manufacturer to prove that it is in the public interest and at the same time in the Government White Paper one finds this approach to monopoly: The Government are satisfied that the 'neutral' and uncommitted approach to monopoly on which present legislation is based remains fundamentally right and they do not propose to introduce into the law any presumption that monopoly or size are in themselves undesirable. Yet at the same time they are introducing in this Bill the presumption that resale price maintenance is undesirable.

Mr. Heath

I do not want to take up any of my right hon. Friend's ten minutes, but in dealing with monopolies we are defining monopoly by size and by saying that it is about 30 per cent. of the market or a substantial amount. This is purely a definition by size. What we are dealing with in resale price maintenance is a restrictive practice. In the 1956 Act, Parliament decided, on the initiative of the Government, that restrictive practices should go. What we have decided in this case is that this particular restrictive practice is against the public interest. It is a judgment on a particular kind of action, not merely on size. When we come to the question of what size it is, in other words, the practices of monopolies, we shall be taking full powers to deal with them. There is no doubt about that.

Mr. Turton

This obviously will be discussed in Committee, but I do not find the argument of my right hon. Friend completely convincing. I hope that we shall be able to persuade him to alter it in Committee. Let us assume that he is taking the method of the 1956 Act, a very cumbrous way, to deal with resale price maintenance agreements. Then I ask him to have another look at Clause 5. It seems essential that the same criteria used in the 1956 Act should be here in this Measure. At least they should not be narrower than they are in the 1956 Act. I hope that when the Chancellor of the Exchequer replies to the debate he will give the assurance that he will secure Amendments to Clause 5 to make it resemble completely the 1956 Act.

The importance of that seems to be that there are a number of systems which have already been examined either by the Monopolies Commission or the Restrictive Practices Court and it is essential that those which have been already declared to be in the public interest should not have to go through the costly procedure of appearance before the court and the argument entailed in that. If the criteria is different in this Bill from those in the 1956 Act, it is clear that those systems will have to go through the whole argument again. I am sure my right hon. Friend would not want that to happen.

Mr. George Brown (Belper)

Is the hon. Member sure?

Mr. Turton

I am sure from the way in which my right hon. Friend has drafted the Bill that he has tried to avoid making those who have already argued their case recently having to do it again. I am sure that if I am wrong my right hon. Friend will correct me.

Mr. Max well-Hyslop

My right hon. Friend has recently written to a firm in the book trade saying the exact opposite, that the net book agreement is not to be taken as in any way implying that resale price maintenance has the approval of the Government.

Mr. Turton

I may have misinterpreted the intention of my right hon. Friend. I think that in this Bill he is trying to allow for certain exemptions, but the Bill does not carry that out as it is at present drafted. The House and the country in general do not want the parties to the net book agrement to have to go to the expense of another £33,000 to argue their case. In Committee we shall try to prevent that happening. My right hon. Friend has given the assurance that he would be ready to improve the Bill in the discussions we shall have on it. In view of that assurance, I personally shall vote for a Second Reading of the Bill tonight.

7.58 p.m.

Mr. Edward Milne (Blyth)

The Secretary of State, in opening the debate, stated that the main purpose of the Bill was to increase competition over a wide field of retail and distributive trades, and he linked that with the Government's White Paper on Monopolies, Mergers and Restrictive Practices.

The Minister said that the forces of competition in our main streets would be increased and strengthened by the Government's proposals on resale price maintenance. I am wondering, on the question of mergers and monopolies, why the Government have hesitated until 1964 before dealing with this aspect of the mechanics of distribution. Although the Minister has defined a monopoly as a firm controlling a third of any particular trade, that is no way to deal with monopolies, to wait until they have achieved a certain degree of strength.

I want the Parliamentary Secretary to take particular note of what has been happening in retail distribution since the end of the war, and particularly during the last 10 or 15 years. Consider the development of Great Universal Stores Ltd. Just before the war the organisation had about 100 stores and about 7,000 employees. By 1958, it had grown into a vast empire, with 2,672 stores and more than 100,000 employees. Its activities cover all sorts of trades and sections of retail distribution.

If one looks at the shops in Britain's main shopping centres one has the impression of competition, although underlying it one has the feeling of certainty that monopoly activities are at work. Take, for example, Allied Suppliers Ltd., a group of Unilever Ltd. Its activities include the Meadow Dairy Co. Ltd., Pearks' Dairies Ltd., the Maypole Dairy Company Ltd., Retail Investments Ltd., which is particularly strong in the North-East and Scotland, Galbraith's, Templeton's, Massey's, Cochranes' and others in the centres of retailing in Scotland. I hope that the Chancellor will tell us tonight what will be covered by the Government's definition of "monopoly" in this sphere.

Loss-leaders and the Clause covering them have been discussed at length today and I believe that the weakness of the Bill in its ability to define these things is shown on this subject. Heinz, for example, sells products to shopkeepers throughout the country, although there are at least eight different prices for the commodities the firm produces. I agree with the Minister about the quantity buying of the large stores compared with the small shopkeeper. The latter is bound to be at a disadvantage. The large retailer buys in bulk and large firms of food manufacturers and canners have "special weeks" for certain items. When goods are purchased at a special rate during those weeks it is simple for the large retailer later to sell those goods at the normal price, although they were designed to be sold during a special week, and thus make an even bigger profit.

"Loss-leaders" is in some respects a misleading term, because any retailer who wants to stay in business, and who indulges in the practice of loss-leading in its true sense, will find himself out of business. Loss-leading really means the shopkeeper selling a number of commodities, a fraction of the lines he sells, at cost or even below. He then proceeds to mark up the rest of the articles—[HON. MEMBERS: "No."] It is all very well for hon. Members opposite to disagree with me, but they know that this happens in the retail distributive trade. It is obvious that if any shopkeeper is selling goods at cost, or below, he must, if he wants to stay in business, mark up the other items.

Mr. Angus Maude (Stratford-on-Avon)

Surely the hon. Gentleman has not taken account of the fact that if the loss-leader system works, and gets more people and trade into the shop, the turnover in the other commodities goes up and it is not necessary for the shopkeeper to increase the prices of the other articles.

Mr. Milne

The hon. Gentleman can resolve that one with his own Front Bench. He is really making my point; that the turnover in the other goods should lead to an honest reduction in prices, but because the retailer must offset the losses on his loss-leader items by marking up the prices all round he is restricted from passing on the reductions to the customer. However, I am not here to conduct a war of attrition with hon. Members opposite. They must sort it out for themselves.

To get a true picture of consumer interest in this matter we must study at length the Lloyd Jacob Report of 1949. Several hon. Members have taken the view that that Report was published too far back to be of great consequence today. Despite the tremendous changes that have taken place in the types of distributive outlets, retail distribution in Britain has remained basically what it was when the Lloyd Jacob Committee examined the matter. It is interesting to note what the Committee had to say in paragraph 47 about branded goods and fixed prices: Some of the evidence given by manufacturers and distributors referred directly to benefits which consumers derived from resale price maintenance and to their alleged likes and dislikes. We made a special effort, therefore, to find out at first hand what ordinary shoppers thought about fixed retail prices. The Report went on, in paragraph 48: It is notoriously difficult to discover anything which can be confidently described as the collective view of the shopping public, but we had discussions with representatives of three national women's organisations. They were the National Council of Women, the National Federation of Women's. Institutes and the Women's Co-operative Guild.

The Report continued: The members of these organisations are drawn from different sections of our society and in each case their representatives took steps to find out the views of as many of the members as possible.

Mr. John Stonehouse (Wednesbury)

Is my hon. Friend aware that the Women's Co-operative Guild does not necessarily take the same view today?

Mr. Milne

That is not entirely correct, because I intend to deal with paragraph 19 of the Report, which is still substantially the view held on this issue of branded goods by the three women's organisations that I have mentioned.

Paragraph 19 stated: The representatives of the various women's organisations who gave evidence before us were, without exception, strongly in favour of branding. They found it convenient when shopping not to have to examine everything they bought in order to assess its quality; they had found that the containers in which branded goods are normally sold helped to keep the article in a satisfactory condition… The Report went on to deal with the safeguards shoppers had, the prices of goods and the fact that they were buying branded articles.

The Bill is not a good Bill, not merely because of the criticisms which can be directed against it, but because it is incapable of carrying out what it is intended to do. The Minister spoke about the forces of competition and the Government's wish to help the consumer and tackle monopolies. The Bill is contradictory. If it went on to the Statute Book in its present form, it is possible that within six months or a year afterwards things could be precisely as they are now in retail distribution.

The Bill will allow all the present agreements to continue in operation, if certain conditions can be satisfied. The operation of the Bill will not give the consumer, the shop worker, or the trader any of the things which are needed in a modern society. The tendency towards monopoly in the retail distributive trade is rather dangerous. Any of the vast multiples are able to buy up shops and close them at will.

Another big change which is taking place in retail distribution is that which I illustrates by referring to Allied Suppliers Ltd. At the moment, it has seven or eight retail distributive outlets in the grocery trade in the main street of any large city. We can rest assured that four or five of these outlets will be closed and that there will be concentration.

Another factor which must be considered is the case where the manufacturer is also the retailer. How much longer will some of the smaller shopkeepers who are so eloquently talking about competition—some hon. Members opposite are their allies in this matter —he given freedom to sell the goods the outlets for which manufacturers themselves are buying up? In short, the tendency towards monopoly in retail distribution is our main danger. It is not merely the question of resale price maintenance.

8.13 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The hon. Member for Blyth (Mr. Milne) seemed to be more frightened of size in itself than of the abuses which flow from size. I am not frightened of size. I am frightened of monopoly. I was not sure that the hon. Member made that distinction.

We must start our consideration of the Bill with the Reports of the Monopolies Commission, which made it abundantly clear that iii the two cases of wallpaper and electrical components the practice of resale price maintenance had a very deleterious effect indeed. The following sentence appears in the Report in connection with wallpaper: We think that the practice actually does preserve that near monopoly. This is the answer to some of my hon. Friends who have questioned whether the Bill would have any effect upon the manufacturer. I believe that it will, because until this near monopoly can be broken we shall not be able to break their prices.

Mr. Burden

There has been much trotting out of the Report in connection with the monopoly in wallpaper. It is such a big monopoly that it cannot be broken by any control over or abolition of resale price maintenance. One way in which it could be broken overnight is by abolishing the duty on wallpaper.

That would bring in such a flow of wallpaper as to force out the monopoly.

Mr. Ridley

I am not averse to greater international competition. I go along with any hon. Member who wants to see our tariffs lowered. We must start by recognising that this practice in monopolistic or semi-monopolistic industries must be brought to an end. I believe that the abolition of r.p.m. will have the effect of forcing traders to put pressures upon manufacturers. I am certain that this point of view has validity.

The practice of resale price maintenance has been roundly condemned. Nearly every hon. Member would agree that in at least the two cases of wallpaper and electrical components, and perhaps in others which have not yet been investigated, there are very strong grounds for abolishing it. Therefore, the Government must take some action.

The issue boils down to this. Either we ban restrictive practices where proof can be produced by the Board of Trade that they are against the public interest, or we make them illegal and put the onus of proof on the supplier or trader. Here we have put the onus firmly on the trader. There are some very strong reasons why, out of two possible courses—I repeat that these are the only two possible courses—we have chosen the right one.

Mr. Maxwell-Hyslop

If the Board of Trade has the information which my hon. Friend hopes it has, can he suggest why it must keep the secret to itself? Why could not the Secretary of State give us a single fact today to support his generalisation?

Mr. Ridley

I am sorry that my hon. Friends are making me go on rather longer than I had intended. I cannot answer for the Secretary of State. All I can do is to read the two Reports of the Monopolies Commission, which make me, for one, certain that action should be taken.

I want now to elaborate on the question of where the onus of proof should lie. In principle, I will not disguise the fact that I stand entirely for competition, for a free and untrammelled system of marketing. I remind hon. Members of a definition which appears in Article 85 of the Treaty of Rome, because I think that they are the right words: The following shall be deemed to be incompatible…practices which are likely to affect trade…and which have as their object or result the prevention, restriction or distortion of competition… This seems to me to be the principle on which we should stand.

We have been reminded that the law in England presumes one to be innocent until one has been proved to be guilty. This is a bogus analogy. To take a very exaggerated example, if we wish to say that a man cannot beat his wife we do not say that all men can go on beating their wives until we have investigated each case and found some grounds for it continuing. We say that nobody can beat his wife but that if he can make out such a good case for doing so we might be prepared to make an exemption. This is surely the right approach.

Some of my hon. Friends—I agree with them on this—believe that restrictive practices in other parts of our economy are equally, if not more, damaging. I refer to restrictive practices among labour. I do not think that there is any excuse in this age for restrictive machine manning schedules, for demarcation as between trades, or for the restriction of apprenticeships which still goes on in some major industries.

Mr. H. Hynd (Accrington)

What about the restrictive practices in connection with barristers and solicitors?

Mr. Ridley

I cannot excuse these in principle. I am sorry that we are still making no progress against them. I do not think that my hon. Friends would be happy were we to move against these restrictive practices and say that they can all go on until one by one they have been before a court and exempted. That is not a means of proceeding. It would be better to say that all such retrictive practices are wrong unless they can be shown to a court to be in the public interest.

The third reason I advance for the onus of proof being where it is placed by the Bill is that in ten or twelve years the Monopolies Commission and the Restrictive Practices Court have considered only ten industries and brought out reports on ten trades. This is but a minute fraction of our total trade. I do not know what skeletons we have not been told about still lie in the cupboard. I am not satisfied with the rate of progress.

I should have thought that most of my hon. Friends would have accepted the principle of competition, and I am surprised that there can be those on this of the Chamber who would not follow me in that simple proposition. Perhaps some of them are frightened of the electoral consequences of this Bill. My hon. Friend the Member for Rugby (Mr. Wise) seemed a little frightened of the chairman of Boots, but I do not think that we would mind if we were to lose that gentleman's vote. At the same time, my hon. Friend should not have these feelings of apprehension as he has already said, as have other hon. Members, that he will not contest the next election. It would therefore seem better to leave it to those of us who have to contest the next election what attitude to take before we make up our minds on this Bill.

Some of my hon. Friends do not seem able to subscribe to the application of a policy of modernisation. They seem to shirk its consequences. It is easy to vote here for the Beeching Plan and then to oppose in one's constituency each railway closure that is suggested. It is easy to talk about a policy of modernisation, and then to oppose each Measure brought forward to implement it. We should accept modernisation, with all its consequences —we should be ready to welcome it, and go forward with it. I see this Bill as an essential step in the modernisation of our economic system.

I must say that my hon. Friends are a great deal more consistent than are the Express newspapers. I am at a loss to understand the attitude of those newspapers. In 1951 they came out unique-vocally against resale price maintenance, saying of the Labour Government's White Paper: The White Paper condemning price-fixing is a first-class document. For why? Because here at last is the promise of legislation which will give a break to the most important person in Britain—the housewife hammered by the cost of living. I find it hard to understand this change of view over a period of only 13 years during which, as far as I know, no new factors have cropped up to make people violently change their minds. I seriously wonder whether there could be any connection between this present attitude and the fact that it is my right hon. Friend who has brought forward this Bill—

Mr. Burden

Does my hon. Friend know that in 1956 the Government came out wholeheartedly in favour of r.p.m.? Therefore, if there is inconsistency on the part of the Beaverbrook newspapers between 1951 and now, there is much greater inconsistency on the part of the Government in a much shorter time.

Mr. Ridley

I really would be frightened if I thought that my right hon. Friends did not have some flexibility of approach in the matter. They moved against collective resale price maintenance in 1956, and they now realise that another bite at the cherry is right. If we cannot do that, I do not think that progress is possible at all.

It will be extremely difficult to operate Clause 3, which deals with loss-leaders. In fact, I do not think that, as it now stands, it can be made to work. I do not see how it will be policed, or how we shall know when this practice is taking place. The proof seems to be put on the shoulders of the supplier, but will the supplier have a number of people going round to see whether loss leaders are being offered in all the shops up and down the country? Further, what happens if he is wrong. The words in the Clause are: …has reasonable cause to believe… that loss-leader tactics are being used. What redress has the retailer when the supplier proves to be wrong?

The traders' associations themselves think that this Clause in unworkable, and I rather question whether it is needed. Loss-leadering has been made out to be the most wicked and shocking practice, but I do not see that it is as unfair as all that. I understand that Canadian legislation against loss-leaders has hardly ever been used. What is wrong in a manufacturer wanting to reduce the price of a few lines in order to attract customers? Is not that a perfectly legitimate weapon of competition? I doubt whether we should ban it. It would seem that once r.p.m. has gone these is very little motive left for operating loss-leader tactics. I cannot see attractiveness of cutting 6d. off the price of something that does not have a controlled price. I doubt whether we need this Clause.

My right hon. Friend has gone very far with the three conditions in Clause 5, and, in particular, his second condition, in subsection (2,b): …the number of establishments in which the goods are sold by retail would be substantially reduced… I want to compare that with the Common Market rules. Those rules equally ban r.p.m. completely, equally say that the onus of proof must be on the traders, and say that the conditions upon which exemptions from the banning of r.p.m. can be granted are Any concerted practices or classes of practices which contribute to the improvement of the production or distribution of goods, and to the promotion of technical or economic progress, while reserving to users an equitable share in the profit resulting therefrom. That is a much tougher ground for exemption than the three conditions in the Bill, and my right hon. Friend must not water down this Measure to such an extent that it will have none of the good effect he has claimed in its support. The "number-of-establishments" provision gives the shopkeepers a fairly good guarantee that they will not be forced to close by economic pressure, because if there is such a threat they can plead that as a ground for exemption.

It is worth comparing this state of things with that of the small farmers —another class that is having economic pressure applied to it. The small farmers cannot blame claim that the Price Review is wrong and should not be applied to them because the number of establishments will be substantially reduced as a result. That claim cannot go forward. It therefore seems that this provision takes away one of the main strengths of the Bill, and it will make it harder to achieve the objects set out for it.

When one looks at the figures of the decline in the number of shops, one is staggered to see that since 1957 there has been no reduction in the number of grocers shops, despite the breakdown of r.p.m.

It is also interesting to see that between 1957 and 1961 the number of confectioners, tobacconists and newsagents declined from 77,000 to 71,000 despite the existence of r.p.m. in those trades. I am tempted to come to the conclusion that r.p.m. does not affect the number of shops, the number of outlets nor the conditions of trade in them. It seems to me, as in the case of the small farmers, that this is one of the economic facts of life. Where there is room and economic need for shops or more farms they come in, and where economic forces are moving against them they tend to disappear. This is not the time or place to go into the many factors which must be acting, but one can maintain that the importance of r.p.m. in the pattern of distribution has been grossly exaggerated.

Modernisation of the system of distribution or of any other parts of our economy must, does, and will involve change. I am sure that we all share the apprehensions and fears of those who may be affected by that change and who may be personally involved, but that should not be a reason for preventing us going forward. Rather, it should be a reason for making us redouble our efforts to help the victims of change wherever it occurs.

I am sad that the Government have not in this Session brought in their Measure to deal with redundancy payments. Any Measures which can be brought forward to make changes attractive or less unpleasant for a section of the community, whether shopkeepers, farmers or trade unionists, are to be welcomed. These are the lines on which we should be thinking while at the same time pressing forward in making our economy more efficient.

8.31 p.m.

Mr. John Stonehouse (Wednesbury)

As the sponsor of an earlier Bill to abolish resale price maintenance, I support the principles of this Bill, but I regret the way in which it has been introduced and the ill-considered drafting which has resulted in every speech in the debate opposing the Bill in one way or another.

One of the surprises of the debate has been that although there have been two speakers on the Conservative side to speak in support of the Bill, and only two, they gave the Bill only qualified support. There have been many others anxious to intervene in the debate from the Conservative side who are obviously wholly opposed to the Bill. The Bill demonsrates the complete disarray of the Conservative Party.

The party opposite cannot expect to be able to implement a Measure of this character effectively before the election, because its own supporters are so totally divided about it.

Dame Edith Pitt (Birmingham, Edgbaston)

As one of those who would very much like to show their complete support of the Government, but who look like being defeated in that object, I hope that the hon. Member will confirm that when I debated this matter with him on the radio I showed my complete support for the proposals.

Mr. Stonehouse

I am happy to do that and I will limit my remarks to 10 minutes or so to allow the hon. Lady, and so many of her colleagues who want to have the opportunity of being called, to take part in the debate.

I agree with the Guardian, which said, on 26th February, that However quickly the Bill gets through Parliament its effect on prices in the shops can bring no, certain rewards this side of an election. This is absolutely right. It is a window-dressing Bill. It will have no real effect on prices. It has been brought in now to try to create a good image for the Conservative Party.

The Guardian went on to say: The Conservatives have taken thirteen years to do what the last Attlee Government would have done if it had had another year in office. For thirteen years since then prices have risen annually. The fact that the Government has done the right thing now does not mean that the Conservatives' failure to do it before was anything but harmful to the economy as a whole". If the Bill is right now, why did not the Conservative Party act many years ago?

If it is right now, why did the Government force the House of Commons to accept the 1956 Act, with its iniquitous Section 25, which gave power to manufacturers to insist that their prices were adhered to not only by the wholesaler, but the ultimate retailer, a power which exists in no other country but our own and a power which is quite medieval in its concept. If the Conservative Party believed in modernisation, and in passing the benefit of competition on to the consumer, it would have got on to this line a very long time ago. Frankly, I am not very impressed by this late conversion.

There ate several reasons why I am concerned about the way in which the Bill has been introduced. First, there are Clauses in it which are ill considered. Hon. Members opposite have pointed out how inadequate the drafting has been. Another aspect of the matter is that the Government are putting the decision on whether or not r.p.m. should continue in certain trades on to the judiciary. The Restrictive Practices Court will have to make the decisions. The Court is to be strengthened by more lawyers, but, apparently, it is not to be strengthened with enough laymen and economists, people who, we hope, would be able to bring the consumer's voice into the matter.

I do not believe that the Restrictive Practices Court is the body to decide on the issue, of resale price maintenance. The Board of Trade should make the decision. The Evening Standard wrote: The practice of handing over a political decision to the judiciary is becoming a common abuse today. It is entirely indefensible. Like those ostriches back in the Cabinet of 1962, the Government is simply leaving someone else to do is own dirty work. The Evening Standard is absoutely right.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred to the interesting experience of men who beat their wives. What he did not make clear about the Bill is that it will allow the man to go on beating his wife until the wife or some other person is allowed to make an appeal against it. In fact, resale price maintenance will continue in all cases in which an appeal takes place before the court and, as a result, there is unlikely to be any effective breaking of r.p.m. for many months or even years. There will have to be the tedious process of appeal to the Court, and this will lead to a long delay of, perhaps, five or six years before the system is effectively broken.

Mr. Maxwell-Hyslop

It is fair to make this distinction, is it not, that a wife cannot change her husband with the same facility that a consumer can change his brand? If the consumer does not wish to buy a brand subject to resale price maintenance he will have, in a large number of cases, the alternative of buying a brand which is not subject to it.

Mr. Stonehouse

That is not entirely so because, in many goods, there is a common understanding to apply resale price maintenance to all commodities. This applies particularly to cars, electrical accessories for cars and hardware.

The hon. Member for Cirencester and Tewkesbury referred to the Reports of the Monopolies Commission. Here I agree with him. The Monopolies Commission condemned r.p.m. in very strong terms. We have it condemned in relation to wallpaper. We have it condemned in the Report on electrical equipment for motor vehicles at pages 364 and 365, where there is a very careful analysis of the case put up for price fixing and that case is entirely demolished. The Monopolies Commission took six years to produce its Report, and it came out with a clear recommendation that the practice of resale price maintenance on these goods should be terminated by all suppliers of such goods.

Are we to understand that, although the Monopolies Commission has given this clear condemnation of resale price maintenance, the matter is to be referred to yet another tribunal, namely, the Restrictive Practices Court, before the practice is discontinued?

This is a time-wasting procedure. The Board of Trade should have been honest enough to accept the recommendations of the Monopolies Commission on wallpaper and electrical appliances for cars and on the other commodities in regard to which it is strong enough to make up its mind and to instruct suppliers to discontinue the practice forthwith.

We have heard precious little in the debate about the interests of the consumer. A great deal has been said about the interests of the small shopkeeper. I consider that it is the interest of the consumer which should be paramount in all this. When I introduced my Bill, some time ago, I received a tremendous amount of correspondence from pressure groups. In particular, I had documents from the P.A.T.A., which speaks on behalf of chemists. The same organisation recently sent a document to all Members of the House which, I think, shows that its case is feeble, flimsy and anaemic. It seems to believe that the reiteration of a slogan is a substitute for argument. When one boils down its case, it amounts to this, that wholesale pharmaceutical dealers are entitled to a reasonable profit. They are, apparently, the ones, who must determine with their suppliers what that profit shall be. It is an arbitrary determination. That is entirely indefensible.

The second point which they made—the hon. Member for Putney also made it today—is that because the chemists are an essential part of the National Health Service, and depend on price-maintained commodities to make a reasonable profit, price maintenance must continue so that they can continue to supply drugs and to dispense prescriptions under the National Health Service. This is entirely wrong. A chemist should not be subsidised in his work by the buyers of cameras or roll films. The people who buy these commodities should not have to subsidise the Health Service.

Some of the more interesting correspondence which I received came from consumers. I should like to read a letter which I had from a consumer who wrote as follows:

"Dear Sir,

Thank you very much for trying to bring about an end to price fixing. I feel very strongly about this. I am a working man's wife trying to manage on a very small wage and out of it having to meet the very high prices. I am enclosing for you a small ticket which came on a toy sewing machine I purchased just before Christmas. This I bought for my little grand-daughter who, by the way, is suffering from a muscular complaint and had she not been longing so much for this I should certainly have returned it and demanded my money back. The sewing machine was the Vulcan and I consider profits like this a disgrace and the sooner you put this Tory lot on the dole the better. When I think of how much I had to sacrifice to pay this big profit to the big people for a toy for a poor little invalid child. I truly feel ashamed to belong to the human race; and I hope you at least will send this ticket to the wholesaler in question. Again, thank you for trying to help us, and you know where our vote will be".

My correspondent encloses a slip which is from L. Rees and Co. Ltd., of 31–35 Wilson Street, London, E.C.2. This shows that this commodity cost the retailer 24s. It was sold at 52s. 6d., which is a gross mark-up of 112 per cent. The profit to the retailer on this toy machine is 27s. 6d.

I agree that that is an exception. Many commodities are not sold with a 100 per cent. mark-up, but many are sold with a considerable mark-up and I should like to quote a few. A Sunbeam cycle is sold for £9 19s. 6d. The markup is £2 17s. 3d. The retail price of a Triang car is £6 5s. The margin is £1 15s, 5d. The Bex Bissell Shampoomaster—I have given this example to the House before—allows a mark-up of over 80 per cent. to the retailer.

There are many other examples, but I do not want to quote all of them. They range from hardware and furniture to clothing and many other examples showing mark-ups of between 50 and 100 per cent. on the original buying price. This may be a fair price in a department store, where a service is provided, but it is not a fair price in a self-service store or discount house in which the customer helps himself. The point which should be made on behalf of the consumer is that he is entitled to choose the sort of service that he wants. If he wants a reduced service in a self-service store or discount house, he is entitled to get the price reduction which should come with it. In all the examples on my list, the margin could be cut by 50 per cent. in a self-service store.

Examples have been quoted from other countries to show that where r.p.m. has been abolished, prices have gone up. I beg to differ with those examples. Sweden has been a case in point. My hon. Friend the Member for Ogmore (Mr. Padley) genuinely believes that prices have gone up in Sweden. As I have seen from experience, however, the customer in Sweden can choose, not only in the centre of the towns but also in the countryside, whether he or she goes to an expensive store or to a cut-price store or discount house where goods can be bought at cut rates. There are discount houses, for example, on the outskirts of Stockholm where dry goods or non-food commodities are sold with a 10 or 15 per cent. mark-up compared with the 50, 60 or 75 per cent. mark-up of the department store.

In Sweden, the United States and other countries, discount-store type selling has been growing and the customer benefits because he or she is able to choose what sort of service they want. If they choose to get service which is not as good as in the department store and take advantage of a cut price, they can do so.

I believe that we must have that sort of freedom for the customer in this country and encourage greater efficiency in retailing. This, in turn, would bring pressure to bear upon the manufacturers, who in many fields—the Reports of the Monopolies, Commission confirm this—have become slothful because they can rely on a guaranteed consumer market and do not have pressure coming up at them from the retailer to reduce their prices.

I believe that there will be benefits in efficiency in retailing and efficiency also in producing if the principle of the Bill is implemented, but I regret the way in which the Bill has been introduced and the ill-considered way in which it has been presented to the House. I hope, however, that before long, after we have won the General Election, it will be possible for us on this side to do something effective to achieve efficiency in retailing and to protect the consumer.

8.47 p.m.

Major Sir Frank Markham (Buckingham)

This is one of those rare occasions in the history of our Parliamentary democracy when the Conservative Party is split. It has often been said from the other side of the House that the Tories are stupid but united. We are not as stupid as we look, and occasionally we are not as united as we look.

When there is a division in the Conservative Party, it goes down to very deep roots. In the past, in the divisions that I can remember—for example, on Suez and on the Common Market—deep roots were being disturbed. The same is true of today's Bill. Part of the shock to the party derives from a sudden, inexplicable change on the part of the Board of Trade as recently as January this year.

Let us look at our own Tory history in this matter of resale price maintenance. At the last election, many of us throughout the land could give pledges to some of our most earnest workers and keenest questioners that the Tory Party would not interfere with resale price maintenance. We could do that or the authority not only of the Lloyd Jacob Report but of speeches in the House of Commons by men of the distinction of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) and my right hon. Friend who is now Minister of Defence. Indeed, several Cabinet Ministers said, not only in the House but in the country during the election campaign of 1959, that a Conservative Government had no intention of altering the existing resale price maintenance.

I was pledged, as were many other hon. Members on this side of the House. Indeed, no hint was given of any change, not even as recently as the Queen's Speech of November, 1963. Not a hint was given that anything was brewing either in the Board of Trade or in the Government or that a change was on the way. Still more recently, the "bible" of the party, the fighting war book, the "Campaign Guide", published only a few weeks ago, devoted only two paragraphs to resale price maintenance, very meek and mild and more or less indicating that it was worth while continuing with it.

Into this stream we suddenly got a decision by the Secretary of State that a Bill would be introduced to abolish resale price maintenance, and this—and I put it down as a charge against him—without any consultation with any of the usual bodies like the 1922 Committee of the Conservative Party in this House. [HON. MEMBERS: "Oh."] This is very important.

If the Government want to change policy, surely the first thing they should do is to approach their own supporters —through the normal channels on this side, and hon. Members opposite of course have their own organisation. If the Secretary of State had done that, if he had come to the 1922 Committee or called a special meeting of the party's Trade and Industry Committee and said, "This is what we propose. What is your opinion and advice?" we should have been glad to have co-operated in the drafting of a Bill.

But there was no choice of that at all, and in consequence the Secretary of State must bear the charge of rocking the Conservative boat pretty badly at a very delicate time. We are described as rebels because we are adhering to policies which have been worked out in the past and have been reaffirmed consistently. We are not rebels. The rebels are on that Front Bench and in the Cabinet. It is they who have changed consistent Conservative policy adopted and approved over the years.

What will be the consequence of the Bill? The Secretary of State made it clear that one of his objectives is to reduce the numbers working in the shops. Obviously, he cannot do that, by dismissing workers in individual shops because already shopkeepers large and small review their staffs with a fine toothcomb at every opportunity. The staff numbers are not excessive in relation to the number of shops. The Secretary of State can only achieve his purpose of reducing the numbers in the retail trade by achieving directly or indirectly a reduction in the number of shops, perhaps a large reduction. How can he secure the extra competition which he says he wants if he reduces the number of shops? He will, instead, increase the little local monopolies.

The first product of the Bill will be to reduce the number of shops, especially in the small towns and villages, creating monopoly shops in their stead. There is no doubt that the Bill, if successful —and I do not think that the House will let it go through in its present form—will drive many small traders into bankruptcy, leaving others to charge whatever prices they can get. I believe that the small trader is a very valuable asset to this country and that we have the best distributive system in the world. The public has an absolutely free choice as between the little man around the corner, the large store, the supermarket and the great departmental store with its opulence and display.

This Bill strikes at the little man. It eases him out because, as the Secretary of State has said, the little man somehow or other is redundant to the Secretary of State's pattern of what the future should be. I stand here not just for the small trader, who is a very necessary part of the British picture. I stand here for the consumer as well. It is the interests of the consumers which are being attacked by the Bill. There will be much less choice of retailer and no possible way in which prices can be reduced.

I now refer to the Clause dealing with loss-leadership. I have already pointed this out to the Secretary of State upstairs—I could not get any answer from him, and I will see if I can get an answer from the Chancellor of the Exchequer, because I am certain that he knows far more about economics than does the Secretary of State. The Bill defines a loss-leader as anything which is sold at less than cost. Any tradesman, any local ironmonger, knows that he can display loss-leaders by the dozen and still sell at something above his net cost. A loss-leader is made a loss-leader not by selling below cost but by a diminution of discount. I ask the Chancellor of the Exchequer, who has much greater knowledge, frankly to tell the House that the Clause as drafted would make permanent and legalise loss-leaders in a way which no other Measure could. It will basically legalise the loss-leader, because any trader would be able to say that his discount was 15 or 20 or 25 per cent. and so long as he sold at just a fraction above his invoice costs he would be acting, perfectly legally.

But that is not my main complaint. I have already made the point that I and my colleagues are not the rebels; the rebels are on the Treasury Front Bench. It is they who have rebelled against good sound policies which have served this nation well, and it is they who are now diverging from good practices into the unknown: a divergence that will sacrifice many little tradesmen. It is they who are changing Conservative policy and it is we who are sticking to the good line that has been tried out so successfully for a generation or so.

My main objection to the Bill has been echoed by hon. Member after hon. Member. One of the interesting things in the debate has been that hon. Members speaking in favour of the Bill, like my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), have said that although they approve of the Bill they want to change root and branch at least three of the major Clauses. The major Clause in my view is that dealing with the onus of proof.

Time and again, individually and collectively, we have asked the Secretary of State for Industry and Trade to modify this provision. He has refused every time. I and those associated with me find this Clause the biggest stumbling block of all. It has been traditional in Britain that a man or a firm is innocent until proved guilty. The onus of proof Clause lays it down that a firm is assumed to be guilty unless it can prove that it is not acting to the public detriment; and it will cost a firm £25,000 or more to defend itself.

I find that shocking. I know that there is one precedent for it, and I know that the Secretary of State has hung on grimly to this precedent as if it were an angelic lifeline from the depths of hell. But there is no reason why there should be this distortion of our traditional English practices. Unless the Secretary of State or the Chancellor of the Exchequer can assure us that this onus of proof Clause will be amended and that in all these matters of trade, as in other respects, a man or firm will be regarded as innocent until proved guilty, I and my colleagues will divide the House tonight. It may well be that there will only be a dozen or so of us going into the Noes Lobby and only a score absta ning, but we know from talks which we have had in the country and upstairs that the great heart of our party is dead against the Secretary of State on this Measure, and I hope that it will be defeated.

9.0 p.m.

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

Time does not permit me to follow the hon. Member for Buckingham (Sir F. Markham), but I do not accept what he said about the onus of proof. I welcome the Bill, though I hope that people will not confuse support for it with outright opposition to the small man.

My attitude to the Bill is vicarious. Some of its features appeal, for I think that they will assist the retail revolution which is long overdue in this country. Resale price maintenance has undoubtedly held back retail innovations like the American discount store. On the other hand, it must be recognised—and I do not think that the Secretary of State for Industry and Trade faced this this afternoon—that intense price competition will force some small shops which still remain in the High Street, notably the hardware stores, into other parts of the town. This will not mean an end of the small shopkeeper. On the contrary, I think that the Bill will oblige the small man to think out new ways of proving his usefulness in the modern economy. Small shopkeepers can do much for themselves through collective action.

On the other hand, small shopkeepers should not regard their rôle in r.p.m. as entirely passive and entitling them to the undiluted sympathy of the public. Many manufacturers would be happy, especially in the present state of over-capacity, to sell to discounters and orthodox retailers alike. But some suppliers who offer their goods to cut-price retailers find that their other shopkeeper-customers refuse to display, or even to stock their goods.

Incredibly enough, according to Which, of September, 1961, the Yorkshire Evening Post was even under pressure from some of its advertisers not to accept advertisements of cut prices on behalf of the Grandways discount store, in Leeds, and I am sorry that it spinelessly submitted to that pressure.

Much could and should have been done in the field of distribution in recent years, given the revolutionary changes which have taken place. Yet in this modern world of bewildering variety, controlled to an increasing degree by large companies and powerful trade associations, the consumer, the housewife, has stood almost alone, and the Secretary of State for Industry and Trade seemed to recognise that only this afternoon when he said that the consumer needs a certain basic protection, and that the Government would provide it.

My major criticism of the Bill is that it has come several years too late, so the test that I apply to it is not whether it will make for a reduction in prices, but how soon? The Bill is, therefore, to be criticised less on its scope than on its timing, and on the ground that it provides for exemptions. There is no question but that if the right hon. Gentleman and the Bill are to be taken seriously the onus of proof must be on the supplier.

But in so far as the right to maintain prices will remain until an appeal to the tribunal has been heard, the new legislation will not be effective for many months and perhaps not for more than a year to come, because manufacturers who apply to retain r.p.m. will be able to enforce it until the Court has given its decision. This should be reversed, if only for the sake of the Court. Evidence of the effect which the abolition of resale price maintenance would have would be far more convincing than mere speculation as to what might happen if it were abolished.

Secondly, how will the tribunal interpret its terms of reference? Thirdly, loopholes will be found in the new Act as quickly as they were found in the Restrictive Trade Practices Act, 1956. Finally, exemptions should be kept to an absolute minimum. If the Bill is tightened along those lines it will ensure that any reduction in distribution costs is reflected in prices.

I do not accept the finding of hon. Members, including those of some of my hon. Friends, in their research forays in other countries. Price movements depend so much on the general economic framework and not just on retail profit margins that international comparisons can be misleading. Comparisons before and after retail price maintenance are very difficult to establish when the secular movement of prices is upward. The simple logic of the matter is that since costs vary widely between retailers because of differences in buying ability, salesmanship, higher efficiency, administrative skill and location, it is reasonable to suppose that lower costs reflecting higher efficiency will be translated into lower prices.

If we are to be guided by American experience it is clear that new techniques of selling can lead to large reductions in distributive costs. Lower prices are not the only benefit which is likely to accrue. A wider range of choice, which is just as important to the housewife, will probably result.

Let us assume that price cuts, even of the magnitude forecast by Professor Yamey, are unlikely to follow the abolition of r.p.m., or that they will not persist. There is still a need for experiment in the kind of low price retailing that has swept the United States. Far too much investment has taken place in distribution in this country recently for us to go on being indifferent to its yield. We shall get this only if legislation of this kind is passed—although I would have preferred it to be more positive and less watered down.

9.6 p.m.

Mr. George Brown (Belper)

My first duty is to congratulate the hon. Member for Sudbury and Woodbridge (Mr. Stainton) on what all who heard it will regard as a remarkable maiden speech. I am sorry that he is not here now to hear me say this. I thoroughly enjoyed his speech. But, like me, he may have to work very hard to make his second speech as good as his first. We shall all enjoy hearing him for a second time.

I almost feel like apologising for intervening in the debate. A great argument has been going on among hon. Members opposite, and I feel that perhaps I should not have come into the debate. The Conservative side is split and confused, and the confusion goes much deeper than is evidenced by what they have said today. The hon. Member for Rugby (Mr. Wise) and other hon. Members opposite have had a row with each other, but their differences go much deeper than might be thought.

When the Chancellor replies to the debate shortly he must answer not only the hon. Member for Rugby and other hon. Members opposite, but some of his colleagues in the Government. The present Minister of Defence, who is not here now—no doubt out of a sense of self-preservation—put himself on record when he was President of the Board of Trade as saying: There have been some criticisms that the new legal right of suppliers"— that is, the right to defend themselves under the present Act"— goes too far… I see that the right hon. Gentleman has now entered the Chamber. [HON. MEMBERS: "Hear, hear."] The cheers of hon. Members opposite shows how worried they were lest he did not arrive.

When he was President of the Board of Trade he put himself on record as saying: There have been some criticisms that the new legal right of suppliers goes too far and gives a force to resale price maintenance which should not be there. I have defended it and will, if necessary, defend it again. The Bill destroys this. Which of the two right hon. Gentlemen is for it?

The right hon. Gentleman went even further. He said: I accept the Lloyd Jacob contention that there are solid, respectable economic argu- ments in favour of the right of the individual manufacturer to preserve his contract over prices right down the line…"[OFFICIAL REPORT, 8th May, 1956; Vol. 552, c. 1063–73.] I am prepared to give way to the right hon. Gentleman. Does he still take that line?

This non-understanding goes far beyond the hon. Member for Rugby. Ministers and the Government do not know where they stand on this matter. When the Chancellor of the Exchequer answers in a minute or two, for whom will he be answering? For himself? For his rival? For the Minister of Defence—who is nobody's rival? For whom will he be answering?

Sir Cyril Osborne (Louth)

What about your rival?

Mr. G. Brown

No, there are no rivals on this side of the House—[HON. MEMBERS: "Oh."] The point is that there is nobody on that side who can possibly say for which point he stands on this argument about the freedom of the manufacturer or the distributor There is not a Minister who can do so. They have all committed themselves to different positions.

As we have listened today, what have we heard? We have heard the—Lord President is it?—the Secretary of State for this, that and the other—over-selling the Bill. Everyone knows that the right hon. Gentleman is over-selling it. The Bill is not that big. It will not do what he said it would do. I suspect that at the end of the day it will have an effect upon prices but, at the end of the day, how much of an effect upon prices? It will be marginal. My guess is that it will be in favour of the consumer, but it will be marginal and the time is a long way off before it will affect anybody.

The right hon. Gentleman suggested that it would be a rather powerful Bill in favour of the consumer. It is a little "tiddler" of a Bill. The Bill has its own defects. I have never heard the answer to the question why the retailers should not have a right of appeal. They could be put out of business. They could be upset by the arrangements. Why should not they be able to appeal? There is no provision in the Bill for workers whose business may also be affected, and why should not they have the right to initiate appeals?

The Bill provides no real arrangement for dealing with loss-leaders. There is no arrangement for the loss-leader practice to be shut off. I am not at all clear why we should have two years' continuation of a practice which the right hon. Gentleman says is wrong, before we shut it off. Why should it be, if the practice is wrong, that we should continue it for two years and then start a new appeal procedure at that point? So the Bill has its own inbuilt defects. At the same time, as we know, it will not really contribute very much at all to cutting down the cost of living.

Just as the case for the Bill is exaggerated, as I believe it was by the right hon. Gentleman, so the case against it is exaggerated. We have heard from the hon. Member for Rugby and others the case for the shopkeepers. This, also, is exaggerated. We all accept that shopkeepers, like other people, are entitled to a decent standard of living, but the point is that shopkeepers render a service to the public, not the other way round. The public does not owe them a service. I have a feeling that the case against the Bill is as overstated as is the case in favour of the Bill.

Our feeling on this side of the House is that we ought to make life easier for the consumer. There is no question but that the consumer is being held to ransom in a number of ways. I have a feeling that this Bill, marginally, will help her. Clearly, all the consumer associations have expressed themselves as being in favour of the Bill for the marginal gain it will make. If the Bill were a part of a real integrated attack upon the things for which the consumer is over-charged I should be for it, but it is not that. There is no integrated attack upon inefficiency in industry, upon the power of monopoly in industry, upon the restrictive parts of industry. It is not part of that at all.

What have we had over some years now? We have had a period of dallying by the Government. They themselves, in 1956, weakened the Measures we left behind us to deal with monopolies and restrictive practices—[HON. MEMBERS: "Read your brief."] There is no brief here. They have failed to follow up the attacks which either the Monopolies Commission or the Restrictive Practices Court have made on these restrictions. They failed to follow up and deal with them. There has been no encouragement to industry to make itself more efficient. There have been no penal arrangements on those parts of industry which did not make themselves efficient.

The House saw last week in the Observer an article about the "Half-Stretched Country". [HON. MEMBERS: "In the Sunday Times."] Clearly, the House has seen it. There has been no effort by the Government to deal with this. The Bill, which is an attempt to deal with prices, could be a part of an entire attack on the whole field. If it were part of an attack on the whole field, of an attack on prices, inefficiency, restrictive practices and monopoly, it would have a part to play, but on its own it has no part to play.

Hon. Members

Get on with it.

Mr. Brown

Speaking in the House at this hour is always a problem. [Laughter.] Right hon. Gentlemen opposite know that to be true.

A Bill to deal with prices could be part of a major attack in this field if that attack were directed at inefficiency in industry, the monopoly power of industry, and if it were really serious business. However, the Bill stands by itself, fits into no pattern and is rather a small business which leads us nowhere at all. The reason why it does not get us anywhere is that the Conservative Party has its own paymasters on the benches opposite.

We should be going after monopolies, take-overs and mergers. [HON. MEMBERS: "And unions."] Yes. If we were doing all of these things we would be going after them, too. If hon. Members opposite were willing to deal with mergers, take-overs and monopolies, I would be willing to talk to my friends about restrictive practices on our side.

Mr. W. R. Rees-Davies (Isle of Thanet) rose——

Mr. Brown

I will give way.

Several Hon. Members rose——

Mr. Brown

I cannot be expected to ask my friends to deal with the mote in their eyes when hon. Members opposite, who have all the power, refuse to deal with the beam in their eyes.

Mr. Rees-Davies

Will the right hon. Gentleman say that if we are prepared to deal across the board with these matters he will be prepared to advise——[Interruption.]

Mr. Speaker

Order. If we cannot hear the hon. Gentleman's intervention it will be, unduly prolonged as an intervention in the right hon. Member's speech.

Mr. Rees-Davies

Is the right hon. Gentleman prepared to say that he would advise his colleagues opposite that the time is now right when we should have an inquiry into the whole range of trade union law and into restrictive practices on both sides, management and labour, with the setting up of a Proper court of inquiry?

Mr. Brown

That is exactly what I was saying. If the Government were prepared not to try to deal with prices by themselves and not to attempt to deal with the small shopkeeper by himself, but were really willing to deal with restrictive practices right across the board—including rents, interest rates and capital gains—then, speaking as a trade union official, I would be prepared to take it right across the board. But the Government have so far refused to do this. They throw in this Bill, which sets the little people who are shopkeepers against the little people who are housewives and leaves alone the big people, who are free. This is the whole point.

If the Bill were part of a wide attack upon monopoly power, upon restrictionism in industry, of an attempt to modernise industry and distribution, it would have its part to play, but it would have to be amended to do it. We shall, therefore, table Amendments in Committee.

I cannot say that we will vote against the Bill. On the other hand, it is not big enough to mean anything by itself. The Government put it forward just by itself. It is not part of a big attack on the issue. [An HON. MEMBER: "You are becoming tired."] It is becoming almost impossible to make a speech at this time of night, in view of the conduct of hon. Members opposite. The Bill is not, as some have claimed, a housewives' charter, nor is it a shopkeepers' disaster, as other hon. Members opposite have claimed. It is neither. It is not part of a real attempt to modernise industry or give the consumer a fair deal; by itself, it is very meagre.

If we could suitably amend the Bill—we will try to do so in Committee—it could be part of a drive to modernise industry. It could be part of a drive not only to modernise industry, but to bring reinforcement to distribution and give the British way of life a boost. As it stands, it is a muddle. It is quite clear that the Government cannot and will not make an attack on the real problems that face industry at this time..

Therefore we cannot vote with them. We can simply say to the country that the Government are playing a charade. They are playing a piece of miming. They go through with this business of the Bill, which will not reduce any prices for a very long while to come, awaiting the time when a Government will plan and organise to bring down prices and allocate resources. In due course we will do that. Until then we shall watch the game which is being played by the Tories by means of this rather unimportant and unrealistic Bill, which it is alleged, will reduce prices.

9.29 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

I will start by joining with the right hon. Member for Belper (Mr. G. Brown) in congratulating my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) on an excellent maiden speech, in which he set before the House a great deal of knowledge and thought. I am sure that all of us, on a both sides, look forward very much to hearing my hon. Friend again taking part in our debates.

I listened carefully to the right hon. Member for Belper and to the right hon. Member for Battersea, North (Mr. Jay). As far as I could gather—because they did not say much about the Bill—they seemed, on the whole, to be in favour of this Measure. They talk about divisions on out side, but I am not so sure that there is altogether unanimity on their side. The hon. Lady the Member for Peckham (Mrs. Corbet) did not seem to like the Bill, and the hon. Member for Ogmore (Mr. Padley) made a very powerful speech saying what a bad Bill it was and then finished up by saying that he would not vote against it. I congratulate the Opposition on this occasion on coming at least to the point of unanimous abstention on something its Front Bench supports.

The right hon. Gentleman described the Bill in the elegant phrase of its being a little tiddler, asked how much effect it would have on prices, and thought that the effect would take too long to be achieved. I take it, therefore, that the party opposite would like a far more vigorous Bill coming into effect far more quickly. [Interruption.]

Turning to the case for the Bill, I would say that it is an integral part of our whole economic policy [Interruption.] I would not support it if that were not the case. I will not stress the importance of economic policy in these circumstances, but I will stress, as did my right hon. and learned Friend the Member for Chertsey (Sir L. Heald), the importance of efficiency for the country. The limitation on our economy of rather slow growth in our population and also limitations on raw materials mean that we must have maximum productivity throughout the economy.

In a country in which more and more, year by year, our resources of manpower, in particular, are being used in distribution, efficiency in distribution is clearly just as important as efficiency in production. In both cases, we must follow policies designed to increase capital investment in modern machinery and designed to improve the organisation and methods of industry. Therefore, we need a system that gives people the incentive to invest in new machinery and methods and also enables the benefit of those new methods and that new machinery to be passed on to the consumer in lower prices. That is the basic Purpose of the Bill.

We all recognise—I think that it is a commonplace amongst us—the need to keep down costs and prices. And I believe that we now have a very reasonable chance, if we seize it sensibly, of getting a very reasonable stability of prices. The recent announcement by the Director-General of the N.E.D.C. about prices in some basic industries is particularly important. But for this purpose it is most important for the benefits of efficiency and new methods to be passed on to the consumer in lower prices.

A little while ago I saw a letter in The Times from a small retailer, and I thought that it went right to the heart of the whole problem. He said: I fully appreciate that the big stores buy very large quantities. I think they are entitled to buy more cheaply and I would not mind paying 11½d. for a recognised 1s. article, even if the big stores got it for 8d. But to take advantage of big buying to put that article up to sale at, say, 9d. because of big buying is not fair. I think that is at the heart of the whole problem. If the big organisations, or more efficient organisations, can buy something for 8d., as the writer says, for which he has had to pay 11½d., why should they be compelled to take the extra 4d. profit? Why should they not be able to pass to the consumer the benefit of their more efficient bulk buying? This surely is the basic economic argument.

Mrs. Corbet rose——

Mr. Maudling

I am sorry, my time is very short.

Mr. Padley

I challenge the right hon. Gentleman to give way.

Mr. Maudling

I have a consecutive argument to give and hon. Members have addressed the House.

Mr. Padley

There is no such commodity in Britain as that mentioned by the right hon. Gentleman.

Mr. Maudling

There is certainly such a letter. It comes from a retailer. This really is the essence of the problem which we all see—that the techniques and systems of modern distribution can produce great economies in the hands of the person who is going to sell to the public. If so, why should he not pass on to the public the benefits of his own efficiency? Does the party opposite really want him to retain those benefits entirely for himself? This is the whole difficulty.

Mr. Padley rose——

Mr. Maudling

I listened to the hon. Member. Perhaps he will be kind enough to listen to me. I heard his point about grocers, and the writer of this letter is a grocer. The point is that in the grocery trade we have seen a very good example of how greater efficiency can lead to lower prices without a reduction in the retail margins of the grocer concerned. These are the figures. The hon. Member gave them earlier.

Mr. D. Jones

Play the game and give way.

Mr. Maudling

Hon. Members do not want to listen to arguments. I do not think that the shopkeepers who are concerned with this matter will be impressed by the loud noises of the Opposition. They are more concerned with the argument.

Mr. Jones

We have had plenty of noise from the other side of the House.

Mr. Maudling

Here is the substance of the problem. A small retailer says, "I recognise that someone else is in a position to sell cheaper than I can, but is it fair that he should do so?". We must resolve the problem of passing to the consumer the benefits of modern methods of retailing without affecting the small man, and through the Bill and, for example, in the grocery trade where the breakdown of r.p.m. has brought about new methods of distribution and greater efficiency, we see the answer to this problem.

I was talking about the need to stimulate efficiency in our economy. There are two different points of view about how this should be done. The party opposite believes in central control, nationalisation and direction. Through many speeches from the benches opposite, from the speech of the right hon. Member for Battersea. North to that of the hon. Member for Ogmore, there beat quite clearly the desire to control prices by Statute. This is their idea. If they believe in the control of prices by Statute and they believe in nationalisation, let them say so. We believe in competition. The party opposite may perhaps have observed that the difficulties which we have been encountering in the course of the Bill are precisely because we believe in competition.

Mr. Harold Wilson (Huyton)

Would the right hon. Gentleman, who was at the Board of Trade part of the time, tell us why a party which believes in competition took seven years to get that report on batteries and motor components?

Mr. Maudling

Because it was being done by an impartial body. I suppose that the party opposite would tell the Monopolies Commission how to do it, how quickly to do it, and what to say.

The point about the comparative treatment of monopolies, restrictive practices and resale price maintenance made by the right hon. Member for Battersea, North is not, with respect, a sound one. We must not make a confusion between size and restriction. It is a very good thing for a is country to have a large number of big units in industry. In the modern world, with modern competition, with all the giants of America and the Continent of Europe, everyone knows perfectly well that large units are desirable. But, under our rather strange definition of monopoly, any firm which has one-third of the market is called a monopoly. I remember once an hon. Member opposite complaining about the terrible competition of the giant monopolies—a strange situation.

In our monopolies legislation, we do not assume that mere size is a bad thing in itself. What we do say is that if size is used to restrict new ideas, keep up profit margins and eliminate competition, that is something to be dealt with. This is exactly how the Monopolies Commission works. This is the whole idea of the thing and how it always has worked. When we come to practices designed to restrict competition or artificially to keep up prices, we have the Restrictive Trade Practices Act, 1956, which laid down as a principle that restrictions of this kind among manufacturers are undesirable unless, in particular cases, they can be shown before a court to be a good thing.

This is precisely the principle we are following in regard to resale price maintenance. People ask, "Why are you now dealing with the retailers? Why do not you deal with the manufacturers?" The answer is that we dealt with them eight years ago. In the 1956 Act, we dealt with the restrictive practices of manufacturers. At this stage, we are dealing similarly with restrictions in retailing. [Interruption.] The party opposite may not like these arguments, but they are true.

We have had many objections today to the Bill. First, it was argued by my hon. Friend the Member for Rugby (Mr. Wise) that prices would go up, not down, as a result of more competition. This seems to be contrary to both logic and experience. People do compete by reducing prices. Overseas experience shows that competition has reduced prices. Experience in the grocery trade, for instance, shows the same. Although motor cars are, theoretically, price-maintained, we all know that if one wishes to trade in a second-hand car one can, by shopping around a bit, get a better price for one's second-hand car.

In any case, those who argue that prices or profit margins will not go down with the abolition of resale price maintenance cannot at the same time argue that the small man will be ruined. They cannot have it both ways.

Mr. Padley rose——

Mr. Maudling

Apparently, some people still want it both ways.

Mr. Padley

Is not the right hon. Gentleman aware that both the small shopkeeper and the consumer can get the worst of it if advertising expenses go up, if stamp traders come into the business and if middlemen and wholesalers come in driving up the cost to the consumer and, at the same time, damaging the retailer?

Mr. Maudling

I know nothing of the sort, and all the practice and evidence I have seen is to the contrary. One cannot, at one and the same time, argue that prices will go up and that people who are retailing will be ruined.

I think that the second argument has much more force than the first. I do not believe that there is any reason to suppose that prices will go up if there is more competition. All the evidence is that prices will come down. There is a far more substantial case to be made for saying that if prices come down it may create difficulty for some people in business.

The argument put forward for saying that prices will go up is linked with the suggestion that if r.p.m. is abolished the small man will disappear, as some of my hon. Friends have said, and that the big people will take over and establish a monopoly. I remember very well the arguments about the Restrictive Trade Practices Act and the position of manufacturers. It was said then that if we abolished restrictive arrangements the little man would be abolished and the big man would take over. It was said that if we had a restrictive practices Act there would be widespread unemployment. Someone said to me, "If you pass this Measure the yield to the Government from Profits Tax will fall by 25 or 30 per cent.".

All these things were said about the 1956 Act which was designed to bring and which has brought more competition into manufacturing. It has not been enough, I agree; that is why my right hon. Friend will stiffen it up. None of these predictions have happened. All the doleful consequences which we were told would follow have not followed.

Mr. Cyril Bence (Dunbartonshire, East)

Why do prices keep going up?

Mr. Maudling

We can argue tomorrow about why prices keep going up. I shall have a few things to say about the reasons for that.

The argument that the abolition of r.p.m. will lead to monopolies is surely least likely to be true in retailing where the number of different outlets, different methods of sale and differences in product is so great. There is clear evidence in this country from the figures that the existence or non-existence of r.p.m. does not affect the trend towards large or small business. Looking at the figures of retailing, it is clear that the sales of the independents in retailing generally across the country have fallen in the last ten years from something over 60 per cent. to nearly 50 per cent. These falls have occurred both in trades which have been practising r.p.m. and in trades which have not been practising r.p.m. Experience in both has been very much the same. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) called particular attention to this.

Take, for example, the particular position of the grocery trade, which is interesting, because there in recent years we have seen a clear and definite collapse of r.p.m. on branded goods and we have had time to examine the effect which this has had on the position of the retail grocer. Certainly from all the figures which I have obtained his position has not worsened compared with the position of other traders who have had what they regard as the benefit of r.p.m. Take the figures of turnover from 1961 to 1963. In all kinds of businesses, independent traders show an increase from 100 to 105. Those trading in durable goods show an increase front 100 to 102; confectioners and tobacconists from 100 to 107; and grocers, where r.p.m. has collapsed, from 100 to 106. Looking throughout the main groups of the retail shops, recent experience shows clearly and consistently that the general trend is very much the same, whether r.p.m, has been in existence or not, or, as in the case of the grocery trade, has collapsed.

I should hope that these figures would give a good deal of comfort to many of the retailers who are feeling concerned for very genuine reasons—no one will deny that—but whose fears have sometimes been exaggerated and stimulated by some of the propaganda put up by particular people who are interested in the campaign and who are concerned about what is happening. It is not wise or right to exaggerate the difficulties which retailers will be facing. I accept that they have reason for concern; no one will deny that. At the same time, the figures clearly show that when r.p.m. has been abolished or has collapsed, as in the case of the grocery trade, bringing new methods and ideas into the organisation of wholesaling and retailing, the independent retailer is able to stand up in competition and is still able to pass on to the customer, as he wants to do and should do, the benefits of lower prices.

A number of other points have been raised. Loss-leading was referred to by many of my hon. Friends. I agree that the wording of Clause 3 wants looking at very carefully, because it is not easy to establish exactly the right position.

It is important that we should enable the full benefit of increased efficiency and lower costs to be passed on to the consumer. At the same time, we are prepared to ban selling at an actual loss. To go beyond this—doubtless it ill be considered at a later stage—in practical terms would be extremely difficult; but also it could lead us to the sort of posi- tion to which my hon. Friend the Member for Rugby referred when he would define loss-leading as selling below cost plus a certain profit margin. Surely, the point of the Bill is that we should not enshrine particular profit margins. We should try to bring pressure to bear upon profit margins by competition in the interests of efficiency wherever we can. I appreciate the difficulty here, and I am sure that it will be discussed. I warn my hon. Friend that if he tries to go beyond the definition in the Bill, it will be very difficult to do. [An HON. MEMBER: "He will have to do it."]

Then there is a question of particular exemptions. I am sure that it is right in the Bill, where we are providing for judicial determination of individual applications, not to provide for particular exemptions. The purpose of the Bill is to lay down a general principle which should be of application to the economy and the distribution system as a whole and then to provide that the Court should decide whether in any given instance there is a case for special treatment.

The reasons which can be advanced to the Court for special treatment, which are set out in the Bill, are the main reasons which are normally argued by the advocates of r.p.m.: a possible reduction of quality and variety of goods, a possible reduction of retail outlets and a possible reduction in the number or availability of necessary services.

Mr. Stone house

Will the Court be strengthened not only with lawyers but also with laymen and, perhaps, economists who can throw light on these points?

Mr. Maudling

The Court already has the necessary expert assistance, and that will be expanded. One of the strong points is the ability of the Restrictive Practices Court since the 1956 Act to make decisions on precisely these things.

To my hon. Friends who have advanced arguments on behalf of many different and legitimate interests, I would say that if the case on behalf of those people or products is so strong, as well it may be, surely they can rely upon the Court on the basis of its practice during the last few years to give full weight to those considerations and determine what is in the general interest. My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) raised the point of people who have already been through either the Monopolies Commission or the Restrictive Practices Court. Those earlier determinations were on a different basis. Often they were against a rather different background and they were before Parliament had taken the determination, for which we are now asking, on the general principle of individual resale price maintenance.

One cannot, therefore, accept those decisions as conclusive either in condemning r.p.m. or enabling it to continue in any particular case. I feel confident that it is right not to make exceptions in the Bill, although it is important to ensure that those who have a real claim, and believe that they have one, should be able to put it before the Court.

The same is true of access to the court. Resale price maintenance is a right of a manufacturer. He applies the right to insist that someone else who buys from him does not sell his product below a certain point. Surely, the man who holds the right—the manufacturer —must be the man who must ask for permission to continue that right. It would not be proper or sensible to suggest that retailers should be in a position to press the manufacturer to ask for a right of restriction if he does not wish to do so. Certainly, combining to impose such a thing upon the manufacturer would be in contravention of Section 24 of the 1956 Act.

These are some of the main points that have been raised during the debate. This is both an economic and a human problem and in discussing the Bill this afternoon the House has been concerned with both the economic and the human aspects. There has been some special pleading by some industries or representatives. As my right hon. and learned Friend the Member for Chertsey pointed out, some of the literature which has been circulated has been, on the whole, rather misleading.

I am sure that the House will ignore the special pleading and get down to the real argument, which is the fair treatment of the small retailer or trader in a world where size of itself it tending more and more to give economic benefits which should not be lost to the nation, but where these economic benefits to the nation should not completely override the genuine social position of the small man.

This really is the balance we are trying to hold under the Bill and which I believe we are establishing at the right point. Of course, many points remain to be considered in Committee. [HON. MEMBERS: "Hear, hear."] I hope that the party opposite does not mind that. The question tonight is that of principle—whether we extend the freedom of price competition, which we have been establishing between manufacturers, into retailing. Do we want to maintain the barriers which exist at present to the use of new methods and the passing on of the benefits of new ideas to the consumer generally?

As I have said, the exceptions given in the Bill are wide and important. The arguments are whether there will be substantial loss of quality or variety to the consumer and substantial reductions in the number of retail outlets and in the necessary services. If any of these things can be shown, then, so long as the Court is convinced that the loss to the consumer thereby outweighs any benefit from the abolition of r.p.m., exemptions can be granted.

These surely are the arguments which have been advanced on behalf of r.p.m., and if its proponents are so strongly convinced of the strength of these arguments, they should have the confidence that the Court will also recognise that strength and give the necessary exemptions.

I ask those of my right hon. and hon. Friends who are thinking of voting against the Measure to consider what that means in the light of the provisions of the Bill. If we turned down the Bill either the consumer would suffer or the variety of goods would suffer or the shops and services available would suffer. If we do not pass the Bill we shall not give freedom to the retailers to pass on the economic benefits of better distribution which they can achieve, which is one of the things we want to do.

My hon. Friend the Member for Putney (Sir H. Linstead) quoted the letter of a grocer who wrote to him. In this Bill we must consider the right of the consumer as a whole. If it is in the interest of the consuming public as a whole, if it enables benefits of modern methods to be passed on, and if we include these defensive provisions for protection in particular circumstances of particular trades, then surely it must be in the national interest to pass the Bill.

I therefore appeal to the House to support the Second Reading. I say only one thing to my hon. Friend the Member for Rugby, who moved the Amendment very carefully, cogently and with great courtesy. He talked about the difficult choice which he must make and quoted Shakespeare. When he comes to make his decision I ask him to remember another quotation, from Hamlet: The friends thou hast, and their adoption tried, Grapple them to thy soul with hoops of steel;

Question put, That "now" stand part of the Question:—

The House proceeded to a Division—

Mr. Eric Lubbock (Orpington) (seated and covered)

On a point of order. Being unable to get into the Lobby owing to the press of hon. Members at the entrance to the Chamber, I was not able to vote. Have I any remedy for not being able to go into the Lobby to vote, Mr. Speaker?

Mr. Speaker

I do not understand the hon. Member to be suggesting that there was any improper obstruction of his presence, save by those who were seeking to do the same thing as he was. I do not think that any difficulty arises about that.

The House divided: Ayes 287, Noes 20.

Division No. 42.]	AYES	[10.0 p.m.
Agnew, Sir Peter	Cooke, Robert	Gresham Cooke, R,
Allan, Robert (Paddington, S.)	Cooper, A. E.	Grimond, Rt. Hon. J.
Allason, James	Cooper-Key, Sir Neill	Grosvenor, Lord Robert
Arbuthnot, Sir John	Corfield, F. V.	Gurden, Harold
Ashton, Sir Hubert	Costain, A. P.	Hall, John (Wycombe)
Atkins, Humphrey	Coulson, Michael	Hamilton, Michael (Wellingborough)
Awdry, Daniel (Chippenham)	Courtney, Cdr. Anthony	Harris, Frederic (Croydon, N.W.)
Balniel, Lord	Craddock, Sir Beresford (Spelthorne)	Harris, Reader (Heston)
Barber, Rt. Hon. Anthony	Crawley, Aidan	Harrison, Brian (Maldon)
Barlow, Sir John	Critchley, Julian	Harrison, Col. Sir Harwood (Eye)
Barter, John	Crosthwaite-Eyre, Col- Sir Oliver	Harvey, Sir Arthur Vere(Maccleef'd)
Batsford, Brian	Crowder, F. P.	Harvey, John (Walthamstow, E.)
Beamish, Col. Sir Tufton	Cunningham, Sir Knox	Harvie Anderson, Miss
Bell, Ronald	Curran, Charles	Hastings, Stephen
Bennett, F, M. (Torquay)	Dalkeith, Earl of	Hay, John
Bennett, Dr. Reginald(Gos & Fhm)	Dance, James	Heald, Rt. Hon. Sir Lionel
Berkeley, Humphry	d'Avigdor-Goldsmid, Sir Henry	Heath, Rt. Hon. Edward
Bevins, Rt. Hon. Reginald	Deedes, Rt. Hon. W. F.	Henderson, John (Cathcart)
Biffen, John	de Ferrand, Basil	Hendry, Forbes
Biggs-Davison, John	Digby, Simon Wingfield	Hicks Beach, Maj. W.
Bingham, R. M.	Drayson, G. B.	Hill, J. E. B. (S. Norfolk)
Birch, Rt. Hon. Nigel	du Cann, Edward	Hobson, Rt. Hon. Sir John
Bishop, Sir Patrick	Duncan, Sir James	Hogg, Rt. Hon. Quintin
Bossom, Hon. Clive	Eden, Sir John	Holland, Philip
Bourne-Arton, A.	Elliot, Capt. Walter (Carshalton)	Holt, Arthur
Bowen, Roderic (Cardigan)	Elliott, R. W. (Newc'tle-upon Tyne, N.)	Hooson, H. E.
Box, Donald	Emery, Peter	Hope, Rt. Hon. Lord John
Boyd-Carpenter, Rt. Hon. John	Emmet, Hon. Mrs. Evelyn	Hopkins, Alan
Boyle, Rt. Hon. Sir Edward	Errington, Sir Eric	Hornsby, R. P.
Braine, Bernard	Erroll, Rt. Hon. F. J.	Hornsby-Smith, Rt. Hon. Dame P.
Brewis, John	Farey-Jones, F. W.	Howard, John (Southampton, Test)
Bromley-Davenport, Lt. -Col.Sir Walter	Farr, John	Hughes-Hallett, Vice-Admiral John
Brooke, Rt. Hon. Henry	Fletcher-Cooko, Charles	Hughes-Young, Michael
Brown, Alan (Torrington)	Foster, Sir John	Hulbert, Sir Norman
Browne, Percy (Torrington)	Fraser, Rt. Hon. Hugh (Stafford&Stone)	Hurd, Sir Anthony
Bryan, Paul	Fraser, Ian (Plymouth, Sutton)	Hutchison, Michael Clark
Buck, Antony	Freeth, Denzil	Irvine, Bryant Godman (Rye)
Bullard, Denys	Gatbraith, Hon. T. G. D.	James, David
Bullus, Wing Commander Eric	Gardner, Edward	Johnson Smith, Geoffrey
Butcher, Sir Herbert	George, Sir John (Pollok)	Jones, Rt. Hn. Aubrey (Hall Green)
Butler, Rt. Hn. R. A. (Saffron Walden)	Gibson-Watt, David	Joseph, Rt. Hon. Sir Keith
Campbell, Gordon	Gilmour, Ian (Norfolk, Central)	Kaberry, Sir Donald
Carr, Compton (Barons Court)	Gilmour, Sir John (East Fife)	Kerr, Sir Hamilton
Carr, Rt. Hon. Robert (Mitcham)	Glover, Sir Douglas	Kershaw, Anthony
Cary, Sir Robert	Glyn, Dr. Alan (Clapham)	Kimball, Marcus
Channon, H. P. G.	Godber, Rt. Hon. J. B.	Kirk, Peter
Chataway, Christopher	Goodhart, Philip	Lagden, Godfrey
Clark, Henry (Antrim, N.)	Gower, Raymond	Lambton, Viscount
Clark, William (Nottingham, S.)	Gram-Ferris, R.	Lancaster, Col. C. G.
Cleaver, Leonard	Green, Alan	Langford-Holt, Sir John
Legge-Bourke, Sir Harry	Page, John (Harrow, West)	Studholme, Sir Henry
Lewis, Kenneth (Rutland)	Pannell, Norman (Kirkdale)	Summers, Sir Spenoer
Lilley, F.J.P.	Partridge, E.	Tapsell, Peter
Lindsay, Sir Martin	Pearson, Frank (Clitheroe)	Taylor, Sir Charles (Eastbourne)
Litchfield, Capt. John	Peel, John	Taylor, Frank (M'ch'st'r, Moss Side)
Lloyd, Rt. Hon. Selwyn (Wirral)	Percival, Ian	Taylor, Sir William (Bradford, N.)
Longbottom, Charles	Peyton, John	Temple, John M.
Longden, Gilbert	Pickthorn, Sir Kenneth	Thatcher, Mrs. Margaret
Loveys, Walter H.	Pike, Miss Mervyn	Thomas, Sir Leslie (Canterbury)
Lucas, Sir Jocelyn	Pitman, Sir James	Thompson, Sir Kenneth (Walton)
Lucas-Tooth, Sir Hugh	Pitt, Dame Edith	Thompson, Sir Richard (Croydon, S.)
McAdden, Sir Stephen	Powell, Rt. Hon. J. Enoch	Thorneycroft, Rt. Hon. peter
MacArthur, Ian	Price, David (Eastleigh)	Thornton-Kemsley, Sir Colin
McLaren, Martin	Prior, J. M, L.	Thorpe, Jeremy
Maclay, Rt. Hon. John	Proudfoot, Wilfred	Tiley, Arthur (Bradford, W.)
Maclean, Sir Fitzroy(Bute&N. Ayrs)	Pym, Francis	Timer, John (Wavertree)
McLean, Neil (Inverness)	Quennell, Miss J. M.	Touche, Rt. Hon. Sir Gordon
MacLeod, Sir John (Ross&Cromarty)	Ramsden, Rt. Hon. James	Turner, Colin
McMaster, Stanley R.	Rawlinson, Rt. Hon. Sir Peter	Turton, Rt. Hon. R. H.
Macmillan, Rt. Hn. Harold (Bromley)	Redmayne, Rt. Hon. Martin	Tweedsmuir, Lady
Macmillan, Maurice (Halifax)	Rees, Hugh (Swansea, w.)	van Straubenzee, W. R.
Maddan, Martin	Rees-Davies, W. R. (Isle of Thanot)	Vane, W. M. F.
Maitland, Sir John	Renton, Rt. Hon. David	Vaughan-Morgan, Rt. Hon Sir John
Marlowe, Anthony	Ridley, Hon. Nicholas	Vickers, Miss Joan
Marples, Rt. Hon. Ernest	Ridsdale, Julian	Vosper, Rt. Hon. Dennis
Marten, Neil	Rippon, Rt. Hon. Geoffrey	Wade, Donald
Matthew, Robert (Honiton)	Robinson, Rt. Hn. sir R. (B'pool, S.)	Walder, David
Maude, Angus (Stratford-on-Avon)	Rodgers, John (Sevenoaks)	Walker, Peter
Maudling, Rt. Hon. Reginald	Roots, William	Walker-Smith, Rt. Hon. Sir Derek
Mawby, Ray	Ropner, Col. Sir Leonard	Wall, Patrick
Maydon, Lt.-Cmdr. S. L. C.	Royle, Anthony (Richmond, Surrey)	Watkinson, Rt. Hon. Harold
Mills, Stratton	Russell, Sir Ronald	Webster, David
	Sandys, Rt. Hon. Duncan	Wells, John (Maidstone)
Miscampbell, Norman	Scott-Hopkins, James	Whitelaw, William
Montgomery, Fergus	Shaw, M.	Williams, Dudley (Exeter)
Moore, Sir Thomas (Ayr)	Shepherd, William	Williams, Paul (Sunderland, S.)
More, Jasper (Ludlow)	Skeet, T. H. H.	Wills, Sir Gerald (Bridgwater)
Morrison, John	Smith, Dudley (Br'ntf'd & Chiswick)	Wilson, Geoffrey (Truro)
Mott-Radclyffe, Sir Charles	Smyth, Rt. Hon. Brig. Sir John	wolrige-Gordon, Patrick
Neave, Airey	Soames, Rt. Hon. Christopher	Wood, Rt. Hon. Richard
Nicholson, Sir Godfrey	Spearman, Sir Alexander	Woodhouse, C. M.
Noble, Rt. Hon. Michael	Stainton, Keith	Woodnutt, Mark
Nugent, Rt. Hon. Sir Richard	Stanley, Hon. Richard	Worsley, Marcus
Oakshott, Sir Hendrie	Stevens, Geoffrey	Yates, William (The Wrekin)
Orr-Ewing, Sir Ian (Hendon, North)	Stoddart, J. A.
Osborn, John (Hallam)	Stoddart-Scott, Col. Sir Malcolm	TELLERS FOR THE AYES:
Osborne, Sir Cyril (Louth)	Storey, Sir Samuel	Mr. Chichester-Clark and
		Mr. Finlay.
NOES
Burden, F. A.	Howard, Hon. G. R. (St. Ives)	Maxwell-Hyslop, R. J.
Clarke, Brig, Terence(Portsmth, W.)	Iremonger, T. L.	Price, H. A. (Lewisham, W.)
Cordeaux, Lt.-Col. J. K.	Jenkins, Robert (Dulwich)	Talbot, John E.
Cordle, John	Jennings, J. C.	Ward, Dame Irene
Currie, G. B. H.	Johnson, Dr. Donald (Carlisle)
Duthie, Sir William (Banff)	Kenyon, Clifford	TELLERS FOR THE NOES:
Hiley, Joseph	Linstead, Sir Hugh	Mr. Wise and Commander Kerans.
Hollingworth, John	Markham, Major Sir Frank

Bill read a Second time.

Bill committed to a Committee of the whole House.—[Mr. MacArthur.]

Committee Tomorrow.