§ 4.55 p.m.
§ Mr. James Callaghan (Cardiff, South-East)
I beg to move, That a sum not exceeding £1,779,405,100 be granted for the said Service.
This modest reduction, I am bound to say, does not measure our dissatisfaction with the failure of the Government either to keep prices at a reasonable level or to reduce them. We take this step to call attention to both of these matters. You will have noticed, Sir William, that one of the Votes was concerned with the salaries of two Ministers without Portfolio. I understand that we will be 448 "smoking one of them out" this afternoon and that the "Minister for Party Propaganda"—which is his proper title—will if he catches your eye, answer the debate. It is appropriate that a Minister who draws his salary for indulging in party propaganda should have an opportunity to speak in the debate, particularly since he will find that he has a considerable case to answer.
I do not know why the Secretary of State for Industry and Trade has vanished from the battlefield. Perhaps he heard the hon. Member for Aberdeenshire, West (Mr. Hendry) asking for leave to introduce a Bill in respect of homicide and suicide and has left the Chamber to take out an insurance policy in advance of further discussion on that Bill, under which the hon. Member for Aberdeenshire, West wants insurances to be taken out as a prerequisite for the issue of gun licences.
My right hon. and hon. Friends and I have asked for this debate because we want to talk about reality this afternoon and not that mixture of hope and fear that distinguished the debate yesterday, when we were talking about possible reductions in prices and what could happen to some people in some cases which no one could exactly envisage. Today, we return to the realities of the situation, namely, the high cost of living which the people are enduring.
It must have been disappointing to Aims of Industry when it commissioned its investigation into nationalisation, to find that whereas only 2.3 per cent. of people regard nationalisation as the most important issue in the General Election, nearly 40 per cent. believe that the cost of living is the first and most important of all the issues with which we are confronted. The people's judgment is sound. Whatever the "Minister for Party Propaganda may tell us tonight, the fact remains that prices are higher today than they have been in our history. The fact also remains that since the Conservatives have been in power, prices have gone up by at least 50 per cent. while, at the same time, the purchasing power of the £ has gone down; and, on the basis of retail prices, is worth no more than 13s. 9d. by comparison with 20s. in 1951.
I am sure that it would be boring to my hon. Friends and annoying to hon. Gentlemen opposite if I were to recount 449 the varied pledges made by the Conservatives to mend the hole in the purse. Immediately before the last General Election the Chancellor of the Exchequer, who was then Mr. Derick Heathcoat-Amory, now Lord Amory, was making precisely the platitudinous, complacent speeches which the present Chancellor of the Exchequer has been making about prices in recent months. Then, as now, the Prime Minister and Chancellor of the day were both telling us—that is, before the 1959 election—that they expected to see a period of stability in prices, if not some reductions. Then both of them were telling us, as we are now being told, that although there is cause for concern, if wages are kept within bounds we need not see an increase in prices.
As always, the Government have attempted to shuffle off their responsibilities on to the shoulders of the wage earners. They rarely speak of their own responsibilities in this matter, although they are many and heavy. The Government are a responsibility, for example, for increased prices resulting from their policy of decontrolled rents
Every hon. Member knows how much the increased cost of living has resulted from increases in rents as well as from the policy which the Government have followed of putting up interest rates, particularly for would-be home owners, and especially from the policy which the Government have not just encouraged but have deliberately followed, of encouraging land speculation. The Government are responsible for the present level of prices in land, and they have shown an almost complete disinterest in the results of their own policies. They have certainly shown a complete lack of interest in manufacturers' profit margins and prices.
The only thing in which they have continuously shown a vested interest is how low can wages be kept. Everything has been put on the backs of the wage-earners. In speech after speech by hon. Members opposite we have been told that he is the one who is responsible for increases in prices. It is time that this was laid low.
It has been left to the National Economic Development Council, not the Chancellor of the Exchequer, to get assurances from certain industries that 450 they do not intend to make general increases in prices. As a result of the approach, not by the Chancellor of the Exchequer or by the Prime Minister, but by Sir Robert Shone, the coal, cement, chemicals, oil and iron and steel industries have all said that they do not intend to make any general increase in prices.
I do not belittle this. It is valuable, particularly in coal. I think that it is more meritorious concerning the coal industry than some of these other industries, because the coal industry is a labour-intensive industry and, therefore, increases in wages have a much greater effect on prices than they do in the other industries. But because of increased productivity, the National Coal Board, under Lord Robens, is able to keep a steady level of prices and the coal miners, by increasing productivity, have shown that the nationalisation of coal was a good bargain for the country.
Some cynics point out that in the case of oil and chemicals and, to some extent, cement, one of the major reasons for their being able to give these assurances is over-production and over-capacity. I would not be cynical about this. It is worth having these assurances. I regret that it was left to the Director-General of the N.E.D.C. to get them. However, it is better to have them from someone than from no one.
I shall raise later another question about these five industries, and that is not whether it is sufficient for them to give an assurance that they do not intend to raise their prices but whether there should be some investigation into the question of whether they could reduce their prices. No one ever thinks or talks these days about reducing prices. All that we talk about is how we can stop them going up. There is a clear responsibility on every scientifically-based industry which is capital-intensive to reduce its prices. I do not believe that there is a sufficient awareness in these industries of the need for them to help to maintain a stable price level by pushing down their own prices.
Having said that I welcome the limited extent to which these 5 industries have gone, may I ask what is the position about the other 12? Seventeen industries were examined during the course of the National Economic Development Council's first Report. Did the Council ask 451 the other 12 industries whether they were ready to give similar assurances about keeping a steady price level? If not, why not? Did it ask them and was it refused? Whether it asked them or not, what does the Chancellor of the Exchequer propose to do about it? Does he propose to ask them what contribution they have to make to maintaining a steady price level or reducing it? That is what he should be doing instead of putting the weight of all his speeches on the necessity of keeping wage increases within the limit of 2½per cent. I will return to that later.
I wish to give a few examples of the effect that recent price increases, which have been phenomenal over a wide field, are having in particular areas. I take the Cardiff City Council because it is my own and I went there last weekend to get the details. However, the same will be true of every local authority. My authority engages in a great many purchases for residential institutions—old people's homes, children's homes and schools. I should like to give some indications of the increases in price which the council has had to pay in the last 12 months.
On 1st April, 1963, the price of a pair of blankets was 56s. 9d. On 1st April, in three weeks' time, it will be 73s. In the same period, flour has increased in price from 87s. 6d. to 99s. 6d. for a 280 lb. sack. The price of meat, which remained fairly steady for the last nine months of 1963, has increased by 20 to 25 per cent. during the first two months of 1964. The price of bacon has increased from 233s. to 315s. per cwt., taking the same base date. The price of electric lamps has increased from 1s. 10d. to 2s. 6d. There has been a general increase of between 6 and 10 per cent. in the price of locks, catches and screws. In galvanised ware, there has been a general increase of about 6½ per cent. Uniform jackets have increased in price from 101s. 3d. to 115s. 3d.
If the Chancellor of the Exchequer mutters something about the authority not being a good buyer, I will match the purchasing authority in Cardiff against any other in the country. It has centralised its purchases. It has very keen buyers, and, despite rising 452 prices during the last 12 months, I could give other illustrations of it having managed through keen buying to force down the level of price which it was being asked. Therefore, do not let me hear any nonsense from the right hon. Gentleman about indifferent buying.
§ Sir Stephen McAdden (Southend, East)
I am grateful to the hon. Member for giving way. As far as I know, I have never interrupted him before. Will he reinforce these impressive figures by pointing out how, in many cases, prices have come down? His attention must have been drawn to the fact that the nationalised industries have brought down prices. Surely he knows that the cost of transport by buses is much cheaper and that rail fares and the price of coal are much cheaper—or are they not?
§ Mr. Callaghan
The hon. Member says that he has never interrupted me before. He must have forgotten all the occasions when we appeared together in the news on television, when I was unable to get a word in edgeways. I will return to these points and complete the case. He need not fear that anything will be missed. The hon. Member used the word "impressive", but I would refer to the depressive increase in the level of prices which will affect rates in due course. People will recover some part of the cost, but it is bound to increase the cost which the ratepayer in Cardiff must bear for these institutions. Every other hon. Member could tell similar stories in his own local authority.
I come to the retail price index so that the hon. Member for Southend, East (Sir S. McAdden) shall have no complaint. It has gone up by nearly 5 per cent. since January, 1962—that is, in a period of two years. The cost of housing has increased by 11 per cent. and the cost of fuel and light by 10 per cent. Both these things are the Government's responsibility. The Chancellor of the Exchequer knows the reasons for the increases in the cost of fuel and light.
We read today in the newspapers that the South Western Electricity Board will have to increase its charges by 11 or 12 per cent. The reason is that the Chancellor of the Exchequer is visiting certain financial obligations on the electricity authorities. He is making them 453 raise the ratio of their turnover to their net assets so that they make a profit of about 12⅔ per cent. to finance the future. The domestic consumers in the South-West who will pay another 18 per cent. on 1st April can say that the Chancellor of the Exchequer is expecting us to finance not only the Government's past mistakes, but the future, too.
We have to provide now the finance for the future building of the nuclear power stations, and the rest—[Interruption.] The Chancellor need not pretend to be so innocent. He knows of alternative ways of financing this, and he has employed them. I have heard him advocating them at Cambridge University. I hope that he will not challenge me on that.
Bread and flour have gone up by 7 per cent., butter and fats by 12 per cent. and furniture by 6 per cent. The price reductions—and this is what the hon. Member for Southend, East is interested in—where have they occurred? Television sets, radio, tobacco and alcohol are all either stationary or have come down. What does any hon. Member opposite think the poorest members of the community spend most on? Is it on alcohol, tobacco, radio or television? Or is it on furniture, food, rent and clothing? Which is it?
This is where we are dealing with the cost of living as it affects the great body of our citizens. I am not impressed by the fact that alcohol has not gone up in price, or that tobacco prices have remained stationary—my concern is that the cost of housing has gone up by 11 per cent. within an average figure of 5 per cent increase. But I must qualify what I have just said, because I am sure that the Government Front Bench will be interested to know that during the last two weeks the price of Martell's "Three Star" brandy has gone up from 48s. 6d. to 50s. per bottle. When a bottle was bought by my informant he was told that this increase had been made in anticipation of the Resale Prices Bill—"we hope to bring the price down again afterwards."
The Financial Times estimated that, since December, over 1,000 separate items of food had increased in price. Since then the flood has continued, with 454 increases on everything from Sugar Puffs to Horlicks. The same story is true in pharmacy. Prices should have gone down, and to some extent did, when the Chancellor reduced Purchase Tax on cosmetics from 45 per cent. to 25 per cent. from 1st January, 1963, but a number of retailers detected a tendency then among the manufacturers not to bring the price down by the full Purchase Tax decrease—there were always the margins.
Nevertheless, pharmacy prices have remained reasonably constant until the last few months. Now some of the larger firms have announced increases—Beechams, Colgate, Palmolive, Kodak, Coty Ltd., Glaxo Ltd., Phillips Scott & Turner, Southalls Ltd., Miles Laboratories, County Laboratories. Indeed, I understand that of the 60 products marketed by Beechams, 38 have been increased in price to the retailer during the last two months. Again, the suggestion is made that the prices are being put up now so that they can be reduced later when the Resale Prices Bill is enacted.
If I may add to the discomfiture of hon. Gentlemen opposite, any one of them who has a headache after last night will have to pay 3s. 9d. for his Alka Seltzer instead of 3s. 6d., and 4s. 9d. for the Beechams pills which, last autumn, cost 4s. 2d.—without any explanation being given for these price increases.
Another aspect of the cost of living is land costs. The free market in land is causing desperation to thousands of families—young people—who would like to buy their own houses, and council house rents have increased out of all proportion. That is all due to the idiocy of a Government whose Home Secretary, when Minister of Housing and Local Government, declared that it was the Government's policy to enact a "free market in land". If it was not idiocy, the right hon. Gentleman should be accused of treachery to the true interests of the people.
These are the things that affect the cost of living, these are the things that ensure Coat house prices and the cost of housing go up by 11 per cent. Farmland is worth about £250 an acre. It was reported only a few weeks ago that 170 acres of farmland were to be "released" 455 as the phrase is, for residential development. The value of large building sites, as opposed to farmland, is not £250 an acre, but £10,000 an acre. That means that the price of that 170 acres at Bishop's Stortford has been increased from £42,500 to £1.7 million. But we must keep the wage earner down to 3½ per cent.!
There was another case at Potter's Bar. Where is the right hon. Member for Enfield, West (Mr. Iain Macleod)? I am not surprised that he refused to serve in the present Government. A plot of land in his constituency was required for a school in 1958, when the price was £769. In the meantime, the Home Secretary's Bill became law—supported by all hon. Members opposite—and, thanks to that Act, the price of the land in question, when finally acquired last July, had gone up from £769 to £30,000. Who pays for that? In the end, it is the ratepayer and the taxpayer.
I give one further example from Enfield, where the council fought a "disastrous decision"—not the decision of the right hon. Gentleman who refused to serve, but a decision by the Minister of Housing about a compulsory order on a 12-acre site at Lavender Hill for allotments. The council wanted to preserve the land for allotments, but only a week or two ago the present Minister of Housing held that the council must pay housing land rates. Three years ago, a private investment company bought this land for £7,500. Its cost today for use as allotments will be £¼ million. A free market in land, indeed! And 3½ per cent!
Is it surprising that the Co-operative Building Society reported last year that the average increase in house prices was nearly 9 per cent.? New houses are beyond the range of four out of five families—they cannot begin to afford them—to a large extent because of the increased price of land, not because of the wages of the building workers. Since the last General Election—when hon. Members opposite will remember that we were to keep prices down—house prices in the country as a whole have gone up by 25 per cent., and in London and the South-East they have gone up by 63 per cent.
I wonder how many speculators are licking their lips and wondering what 456 is to be in the report on the future of the South-East, and how much money they will make out of that? But let us keep the wage-earner to 3½ per cent. Prices have risen four times as fast as building costs.
Last night, the Prime Minister declared that he was engaged in an all-out war on rising prices. Is land a non-combatant in this battle? Is it flying the white flag of surrender? Such examples as I have given make a mockery of any pretence of sincerity in the Prime Minister to talk about launching an all-out war. When interviewed on television recently, the Prime Minister was asked why he could not get interest rates down. He did not answer that question, but said:I expect you are thinking probably of the price of land. You can either nationalise, and in a way if I may use the term, confiscate the land or else you roust let the market work … We do not think there is any half-way house. We think you must either deal with it as we are dealing with it now or you must have complete nationalisation.
§ Mr. Callaghan
I challenge hon. Members opposite to put fairly and squarely before the people whether they would prefer a free market in land or the public ownership of land that is ripe for building development. I challenge them to do that, and I will stand by the result. Unlike so many hon. Members opposite, there are thousands of young families who know what a free market means to the blighting of their hopes.
I come next to the problem arising out of rating increases. I apologise for all these figures, but it is important to write these things into the record. Out of a list of 238 rating authorities, 17 show decreases in rates and 221 show increases.Now,said the Prime Minister, when he addressed the Conservative Central Council,we are having a review of this and of what should be the proper relationship between central Government finance and local government finance.Why did the party opposite not start before last October? As my right hon. Friend the Member for Battersea, North (Mr. Jay) said yesterday, the Chancellor has been in and around the Treasury 457 for the last 12 years, in one form and capacity or another.
Why wait? It is not as if no one foresaw this problem. We have had the troubles of rating, derating, rerating, and the giving of relief from rates for particular purposes and because of hardship, over the last seven years. Why wait until the Conservative conference, last October, before announcing a review of the relationship between central and local government finance?
There will be further increases in rates which will arise directly from the Chancellor's decision a fortnight ago to increase the Bank Rate. This will have a serious effect on borrowing by local authorities. Glamorgan County Council has a short-term debt of about £6 million. The short-term rates reacted immediately to increases in the Bank Rate. The overdraft terms offered to Glamorgan by its bank were immediately increased by 1 per cent., an increase which will cost the county council about £40,000 per annum.
In Glamorgan, housing is the responsibility not of the county council but of district councils. I estimate, and this is entirely my own figure, that between £15 million and £20 million will be borrowed on short-term by them in 1964–65. The increase in their charges arising out of the decision to increase the Bank Rate will be at least £150,000 all of which will be visited in one form or another on the ratepayer or the taxpayer.
In Cardiff, we have short-term borrowings of about £30 million for varying periods between seven days and 12 months. The average increase in the cost of borrowing is about ½per cent. since the increase in the Bank Rate. This will mean for Cardiff alone an extra burden of £200,000 per annum. This is equal to a 4d. rate. Some will be recovered by putting up the rents of council house tenants, some by an increase in the general rates, some through rent deficiency payments, some through general grant, but one way or another the additional cost to the people of Cardiff will be 4d. in the £ on the rates.
I asked the Chancellor last week what he intended to do to insulate the domestic economy against the effect of 458 the increases Bank Rate, because he told us, and we always understood, that the purpose of the increase was not to slow down the economy but to prevent the outflow of funds. Why should the Chancellor visit his failure in terms of protecting sterling on to the Cardiff City Council?
I turn next to industry. Total borrowings from the London clearing banks at the last recorded date were £4,169 million. An increase of 1 per cent. means an increase of £41 million a year in interest payments. Let us assume that two-thirds of this is paid by trade and industry. This means that by the Chancellor's own decision last Thursday week a further £25 million a year is the burden being placed upon trade and industry purely in additional interest charges.
What is industry doing in face of this? Precious little. We are living in free and easy conditions in which it is easy to put up prices. There is a condition of near-full employment. Unemployment is going down. The General Election is coming on. There is a condition in which demand is increasing. All the conditions are ripe for manufacturers to add a bit on to the prices, and that is what they are doing in a number of cases. Their aim should be to get prices down, but is it? Can hon. Members opposite who represent big business faithfully swear to the Committee that they are all aiming all the time to get prices down? I very much doubt it, and I would not believe it if they said it.
Let us consider recent company results. The Financial Times of 9th March shows the results in the chemical industry. It quoted seven companies which paid out last year 17.2 per cent. more in dividends than they paid out in the previous year. Not much talk of 3½ per cent. there. Three companies in the furniture and floor coverings trade paid out 16.3 per cent. more in ordinary dividends than in the previous year. I could quote many specific examples from the Financial Times but I will not name them. A food manufacturing and distribution firm paid 12½ per cent. more, a domestic gas appliance firm paid 15 per cent. more.
How does the Chancellor think that this appeals not only to trade unionists, who are asked to confine themselves to 459 3½ per cent., but to hundreds of thousands of people who are getting along just above the poverty line and who are wondering each week how they will balance their accounts?
The National Incomes Commission, in paragraph 185 of its Report on the Construction Industry, said, in July last, thatOur conclusion is that there is now an urgent case in the national interest for a representative survey of the policies and practices in relation to pricing, profit margins and dividends in separate branches of the construction industry, particularly in view of the decade of further expansion on which this industry is about to embark.The Chancellor announced on the same day that new steps would have to be taken to obtain a more detailed breakdown of profit figures. He said that he had begun discussions with the F.B.I. This was last July. It does not take as long as that if one wants a report. What has the right hon. Gentleman been doing since then to get the breakdown of profits and dividend margins in the building industry? Has he any progress to report? If he had been as urgently minded about this as he is about keeping wages down he would have seen a report long ago.
My complaint is that the Chancellor and the Government are squint-eyed about this. They see everything wrong about raising wages and they have practically nothing to say about rising prices even when they are not responsible, and when they are responsible they are even more determined to shrug off responsibility and to know nothing about what is going on. Lord Robens made a strong attack on the engineering industry on 10th January, when he said that the Coal Board's purchasing department was deluged with letters from suppliers of engineering machinery and equipment asking for price increases of between 4½ per cent. and 8 per cent. The Financial Times reported the following week that on the very afternoon on which the engineering wage agreement was reached roneoed sheets, substituting new prices for old, were delivered to the Coal Board and many other people.
We are all indebted to the Purchasing Officers' Association and to the hon. Member for Reading (Mr. Peter Emery), who, I believe, is its director, for the 460 work which it has done not only in bringing the facts to light, but also in giving the Chancellor and the "Minister for Party Propaganda" something to answer for. The Association says, in its conclusions, that there was adefinite price drift upwards because the climate was considered opportune.I assure hon. Members that this is a thought that is most present in the minds of many in the manufacturing industry.
"Business is better, so we put prices up" is the motto and the text. Research shows that many engineering firms mentioned in this memorandum have been attempting to pass on to industry the whole of the recent wage increase. It has been completely unjustified. Figures show that in general mechanical engineering the relation of wage costs to total costs is about 33 per cent. One would think from the way that some people talk that wage costs made up the whole cost of an industry. In fact, as everybody who has studied this matter knows, they do not. They do not even make up the major proportion of the cost of an industry.
I have had some figures produced showing wage costs as a proportion of the total variable costs in a number of specimen industries. I have had to base myself on the 1958 census of production and, therefore, I say now that the figures may have varied, but I do not suppose that they vary as much as all that. If we take the ratio of wages to total costs in industry this is what it looks like: machine tools 33 per cent., scientific intruments 28.5 per cent., general chemicals 13.5 per cent., fertilisers 15.1 per cent., and motor vehicles 16 per cent.; 16 per cent. represents the proportion of wages in the total bill.
What is the excuse? What possible justification have these people got? What a brass neck they have, when wages go up by 5 per cent., to say "We are going to put 5 per cent. on our prices." It is absolute effrontery. Does the Chancellor of the Exchequer have any words of condemnation for it? [An HON. MEMBER: "No."] Let us be fair. He uttered a toot on his penny whistle last January. On the 24th of that month he said that he was concerned. I have examined his speeches since then. He has had a great deal to say about wage increases, but 461 very little to say about increases in prices. I hope that this afternoon I shall shame him into saying something on the subject.
I could go on giving a number of these illustrations, but I do not intend to do so because I think I have given enough to illustrate my point that although, naturally, wages are important, and we are in favour of an incomes policy, nevertheless the fact remains that it is sheer effrontery and throwing dust in the eyes of people to pretend that a wage increase of 5 per cent. in the engineering industry means that prices should go up by 5 per cent. At the most, they should go up by half that amount, and that is being jolly generous to the engineering employers.
I believe that many industrialists do not agree with the Chancellor at all. They agree with the right hon. Member for Wolverhampton, South-West (Mr. Powell). [An HON. MEMBER: "Where is he"?] I do not know where he is. I suppose that he is entitled not to be here if he so wishes. This is the philosophy of the right hon. Member for Wolverhampton, South-West, speaking of the responsibilities of management and on the proposition that management should accept the responsibility for prices.
The right hon. Gentleman said:Managements have no business to accept any such responsibility. The duty of every management is to conduct the business, including the price policy of business, in the way which, in the opinion of the management, is likely to maximise the return on the capital invested in the business. … In some circumstances, returns will be maximised by keeping prices stable or reducing them. But in other circumstances returns will be maximised by raising prices. Wherever that is so, it is the responsibility and duty of the management concerned to raise its prices, whether in the home or in the export market. A management which does not do this betrays more than the shareholders in the business it betrays the employees and the nation as a whole.There are a good many firms which share that philosophy. This is why it should have been the bounden duty of the Chancellor to have constantly pressed home his point of view on this matter. The Chancellor has made no attempt to dissociate himself publicly from that speech. I ask him this afternoon whether he will repudiate the right hon. Gentleman's philosophy in this matter. Will he repudiate the right hon. 462 Gentleman and tell us that he does not accept this view which the right hon. Gentleman has put forward? "Business is better. Let us put prices up", is too often the motto of industry, and it has been shown today by the purchasing officers and a great many other people, too.
It is no use hon. Members shaking their heads—
§ Captain Walter Elliott (Carshalton)
The statement which the hon. Gentleman has read out pointed out that, on occasions, prices should be reduced.
§ Mr. Callaghan
The hon. and gallant Member is entitled to read the statement and make something different out of it. I have read what the right hon. Gentleman said.
I come to my conclusion, and I am sure that there are some who will be glad to hear that. The Prime Minister has said that he has declared an all-out war on rising prices. He said so last night, when addressing the faithful. I have made a list. He has declared an all-out war on all rising prices, except on rising rents, the decontrol of tenanted properties, the price of land, higher dividends and profits, manufacturers' price margins, and higher bank and interest rates. Subject to that, he has declared an all-out war.
I must say that the sword will be rusty in its scabbard if the right hon. Gentleman fights on that basis. He reminds me of a story—I believe that it is true—of the right hon. Member for Woodford (Sir W. Churchill), when he was Leader of the Opposition. He was trying to conduct a fierce attack on the Labour Government of the day. The Member who should have been doing it did not arrive on time. He came in late and sat down beside the right hon. Gentleman, who, with his usual tenacity, was nudging him and trying to get him up to attack the Government. He said that he did not want to do so. "That's right", said the right hon. Gentleman, "That is typical of you. You always arrive late on the battlefield, and when you get there you won't fight.".
I must say that that is typical of the way the Prime Minister is conducting this all-out battle against rising prices. When the Chancellor spoke to the Conservative Association he had very little 463 to say about rising prices. Indeed, I cannot trace that he made any significant comment on the subject at all. He made lots of references to increased wages, but very few to increased prices.
Let us consider what the right hon. Gentleman might have done. Let us consider what the Minister of Economics in Germany, Dr. Erhard, did when faced with rising prices in 1962. Does the Chancellor remember how Dr. Erhard sent for the motor car manufacturers and threatened to reduce tariffs unless they kept their prices at a steady level? Has he considered whether he should apply that sort of tactic in this country? I do not know whether it was bluff on Dr. Erhard's part, but it worked.
What has the right hon. Gentleman done about examining profit margins? Why does he accept so supinely that 16 per cent. is the sacrosanct return on net assets? Was it so before the war? I believe that it was lower. Because it is now regarded as sacrosanct that one should obtain 16 per cent. on one's net assets, the nationalised industries are forced into earning 8 per cent., 10 per cent. and 12 per cent. on their net assets. Why? Has the Chancellor any views on whether 16 per cent. is the right figure as a return on net assets or not? Has he found out why prices in capital intensive industries are not coming down as they should have been? It is not enough to say, "We are holding them level." Some of these prices should and could have been reduced.
What has the right hon. Gentleman got to say about controlling land prices so that he will be able to reduce the cost to the ratepayer as well as to the Exchequer of the increased price of land in relation to housing? What has he got to say about keeping dividends in line with wages? He knows that dividends are moving ahead much faster than the 3½ per cent. which he has laid down for wages. What will he do about keeping down interest rates? Will he restore rent control? Here are the ways of controlling the cost of living and keep prices down. We believe in an incomes policy. We believe that this is the way to secure social justice. This is the way to protect the weak.
464 We believe that this is the way in which we could get a measure of equality as well as maintain the real standard of living of the people. If the Chancellor were to concentrate as much on high prices as he has concentrated on wage increases over the past three years, we might be prepared to take him more seriously when he says that he is seeking an incomes policy. However, there is precious little evidence that either he or the Government are doing so.
Apart from the economic reasons which I have given, there are the human reasons, the plight of hundreds of thousands of people in this country, old-age pensioners, young families and the rest. I get letters every day. People seem to think that I am already the Chancellor of the Exchequer—perhaps I never shall be; that is up to my right hon. Friend—but I get all the letters which the right hon. Gentleman fails to answer.
In addition to dealing with people's Income Tax and the rest, I receive most pathetic letters day after day—I am sure that the Chancellor must have them, too—from middle-aged people, from people on the point of retiring, who, because of the increase in rates and the cost of living, say that they cannot even keep themselves in the home in which they intended to live during their later years. This sort of thing has an effect. I wish that the Chancellor did not have a private secretary, so that he might have to read some of the letters himself.
When the Prime Minister tells us that the Conservatives have made a break-through to abundance, I wonder what sort of world he is living in. He must be well insulated from hardship, I suppose, moving from a great country house to No. 10 Downing Street, Anyone who has had any experience of life knows that it is not true. There are people who are in desperate hardship and poverty today, so talk about moving into an era of abundance is, to my mind, no more than a scriptwriter's phrase. It is a great pity that the Prime Minister does not get out into the country to see these things for himself. Some of us have experienced hardship and we know it. We know what it means to people, and we are not content to have our people sacrificed to the need for another Tory victory. That is why we shall expose 465 the Government's record. We shall fight them to the end to ensure that, after the coming election, we get a Government who will put their priorities in the proper order.
§ 4.42 p.m.
§ The Chancellor of the Exchequer (Mr. Reginald Maudling)
The hon. Member for Cardiff, South East (Mr. Callaghan) made a speech which was racy and vigorous. I am sorry that he had also to be both selective and, at times, offensive. [HON. MEMBERS: "Oh."] Yes, that is perfectly true. I would like the hon. Gentleman to know that I read every letter which is addressed to me at No. 11 Downing Street.
§ Mr. Maudling
I do a good deal. What we are doing for people is a great deal better than the party opposite would do today.
I would like the hon. Member for Cardiff, South-East also to know that, in all the speeches I make about prices and incomes, I couple together the level of incomes and profit margins. If he would rave the goodness to read my speeches, instead of merely attacking them, he might be a more effective debater.
Listening to the hon. Gentleman's speech, it struck me that no one would have thought that he was representing a party in whose few years of government the value of the £ fell by 26 per cent., the average level of retail prices rose by over 5 per cent. a year, culminating, in their last year of office, in an increase of 12 per cent. in the level of prices in a single year. [HON. MEMBERS: "The Korean war?"] Yes, there were difficulties. There always are difficulties.
The hon. Gentleman did not mention that import prices were up 5½ per cent. on a year ago and that imported food prices were up by 18 per cent. on 1961. We have had difficulties, too, but right hon. and hon. Members opposite did precious little about them. Throughout the months of 1951, as the problems grew, they did nothing to deal with the impending crisis and they passed the burden on to us. [HON. MEMBERS: "Twelve years."] I am going back 12 466 years because it was the last time that they had any responsibility, and they have shown precious little sign of having learned anything in the meantime.
The cost of living is only one aspect of the broad problem of the standard of living. Let us for a moment set against the woeful picture which the hon. Member for Cardiff, South-East tried to paint what has actually happened to the standard of living in this country in the past 12 years. Let us look at the facts. Our standard of living has risen at an unprecedented speed during the past 12 years, more than in the 50 years before. My right hon. Friend who is now Foreign Secretary, set in 1954, the target of doubling the standard of living in 25 years. The party opposite scoffed at that, but we have been on the target ever since.
It is not only a matter of consumption, it is not only a matter of living standards and of what people enjoy and have to spend their money on. It is a matter, also, of the social services, housing and schools. Look at the quality of the schools now compared with what it was 12 years ago. Look at the increase in expenditure on education. When we took over, 3 per cent. of our national income went on education. We put it up from 3 per cent. to 4 per cent., and on to 5 per cent., and it is going up all the time.
All these are clear, definite and concrete examples of the advances in living standards in this country which have been achieved in the past 12 years and which no amount of selective statistics——
§ Mr. Harold Wilson (Huyton) rose——
§ Mr. Maudling
I am sorry that the Leader of the Opposition does not like the facts, but they cannot be expunged from the record.
§ Mr. Wilson
The trouble is that I have heard quite a lot of this from the right hon. Gentleman before in the past few years, and I know what is coming next. However, since I have been here for the past hour, perhaps the Chancellor of the Exchequer will tell us why the Prime Minister is not here so that he might take a little economic education of the kind which the Chancellor has obviously failed to give him?
§ Mr. Maudling
A tinge of offensiveness seems to be appropriate this afternoon. [HON. MEMBERS: "Oh."] I am glad that the right hon. Gentleman will await a little economic education. He is more in need of it than the Prime Minister.
I was saying that the level of prices is only part of the standard of living. What determines the standard of living, of course, is the extent to which production rises and the development of the production of wealth in the country. But prices are an essential factor, of course, because one can have rising production and rising wealth with rising prices, in which case some people tend to get left behind—not the wage earner, who has in recent years seen his wages advance faster than prices, not the pensioner, who, under Conservative Governments, has seen his pension advancing faster than prices, but the people living on small fixed incomes. It is precisely because of the difficulties of this group that, for internal reasons, we could not be complacent about a development of our total wealth and prosperity which was accompanied by rising prices.
Equally, on the external side, we see that rising prices affect this country particularly. In France, for instance, there was rising wealth accompanied by succesive devaluations. This is not a possibility which we could contemplate in this country. We must aim both at rising total wealth and total output and at stability of prices so far as possible with rising total wealth for internal social reasons and for external reasons as well.
§ Mr. Walter Monslow (Barrow-in-Furness)
What the right hon. Gentleman has just said about pensions is a fairy story which the Tory Party is telling also on the hoardings. Does not the right hon. Gentleman realise that the purchasing value of the£has fallen in the period which he has mentioned and that there have on two occasions been increased contributions to the National Insurance Fund?
§ Mr. Maudling
Of course I am aware of that. That is the point I was making. The real value of social benefits under Conservative Governments has been rising and has risen a great deal. For good measure, I remind the House that, 468 under the last Labour Government, it did precisely the opposite. These are the facts.
We had from the hon. Member for Cardiff, South-East some examples of the way prices have been moving. In fact, recent experience has been that, over the last 12 months or so, prices in general have risen by about 2 per cent. and within that the food price index has risen slightly less than the total index. For once in a while, we did not hear about comparisons with continental European experience. So often in the past, we have had the league tables trotted out, but not today. Let us look for a moment at the league table for last year, showing how prices have risen on the Continent. In Italy, they have risen by 7.5 per cent.; in France, 6.4 per cent.; Holland, 3.9 per cent.; Belgium, 3.5 per cent.; Germany, 3.4 per cent.; Sweden, 3 per cent., and in the United Kingdom, 2.2 per cent. On this occasion, we have been doing very much better than the continental countries. That is why we did not hear about it from the hon. Member this afternoon. [HON. MEMBERS: "1959."] 1959? I cannot give the figure offhand; 1963, of course, is different.
§ Mr. Maudling
I am selecting recent experience because the hon. Member for Cardiff South-East, who normally raises this point when it suits him, failed to mention it this afternoon when it did not suit him.
§ Mr. Richard Marsh (Greenwich)
To be even more fair, would the right hon. Gentleman be prepared to tell us how many European countries had an even bigger rise in prices than Britain during the last 10 years?
§ Mr. Maudling
During the last 10 years, France and Sweden. Holland was about the same. In Italy, Germany, Switzerland and Belgium, they are lower. Time and time again in the last 10 years, when conditions have been against us the party opposite has a great deal to say; when things are for us, hon. Members opposite ignore them.
469 We are coming to the point, as the hon. Member for Cardiff, South-East fairly pointed out, when there is liable to be growing pressure on prices. Import prices, in particular, have risen by 5½ per cent. during the last 12 months. This is bound to reflect itself, and to some extent is doing so, in the wholesale price index. This is happening, as the hon. Member rightly said, also at a time when, with rapidly growing production, and unemployment falling, there is obviously a tendency for prices to go up. I agree with the hon. Member that this is a time when profit margins tend to rise. Equally, it is a time when wage drift also becomes more important.
If the hon. Member suggests that I am selective—I do not think so, but I believe that he is—he must not take one side without the other. He must squarely face the fact that in the present conjuncture there is a tendency for earnings to rise more than wage rates, and for wage incomes and profit margins to go up. That is why we have come to a particularly important stage in our affairs when we must make a conscious effort to try to establish stabilisation of prices, which can be done only by a determination to hold both the price front and the wage front.
I join the hon. Member in welcoming the interesting examinations made by the Director-General of N.E.D.C. under the authority of the Council of N.E.D.C., which has produced the results which the hon. Member quoted about the five basic industries and which was followed, I was Interested to see, by the road hauliers, who postponed or decided against a 5 per cent. increase in their charges which previously they had contemplated.
§ Sir S. McAdden
Would my right hon. Friend be prepared to comment upon the rather urbane attitude of the hon. Member for Cardiff, South-East (Mr. Callaghan), who completely ignored my invitation to him to tell us what dramatic reductions in prices had been made by the nationalised industries?
§ Mr. Callaghan
I am sure that it is within the Chancellor's recollection that we all agreed that coal was keeping its 470 prices fairly level; that was a fairly considerable achievement, and I said so. In the gas and electricity industries, increases in price are due to the Government's financial policy in enforcing certain obligations upon them. As to transport—the Chancellor will be able to check this—I believe I am right in saying that in the retail price index, which includes all costs of transport, it shows no increase over the period of the last 12 months taken by the Chancellor.
§ Mr. Maudling
I agree that coal has been doing well, but the pressure on prices in the other nationalised industries comes not by any means solely from Government policy, but from wage increases in those industries. It is bound to do so.
In view of the enormous proportion of the national investment which is done by the nationalised industries, it would be economic folly not to insist upon their showing a proper economic return on that investment. [Interruption.] The figures and the targets at which they are aiming have been agreed with them. If they do not earn an economic return. there is danger of misdirection and misapplication of a large amount of important national capital. If they do not raise a reasonable proportion of the money for their expansion, it must come fro as elsewhere and ultimately from the Budget. These are the facts which must be recognised. There is no shuffling away from them.
§ Mr. Arthur Lewis (West Ham, North)
The Chancellor gives preferential treatment to private industry. He gives it to his hon. Friend the Member for Kidderminster (Sir G. Nabarro). He was the one who said "Go to the money market." Of course, he has got preferential treatment.
§ Mr. Maudling
If the hon. Member for West Ham, North (Mr. A. Lewis) thinks that the ability to raise capital with a Government guarantee is the opposite of preference, he should think again.
In looking at the factors contributing to rising prices, let us look at the main 471 causes of the rises. First, there are import prices, and secondly, domestic costs. Those are the two elements which decide the level of prices in this country: first, the price of our imports; and secondly, the amount which we add here in costs. Of the two, the cost of incomes—wages, salaries and profits—is about three times as important as the cost of imports. I had this calculation made for me today.
I do not go all the way with my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) in his economic views, but I go along very much with him in saying that the law of supply and demand is what determines price; we cannot get away from it. We can operate in both of these directions. We can increase the supply, and we can moderate the demand. We are trying to increase the supply by measures to expand production. We are moderating the demand with an incomes policy. In the long run, however, prices will be determined by those two factors interacting. Whatever is done on a temporary, artificial basis, we cannot, in the long run, get away from this fundamental equation.
Therefore, the two important elements in the level of prices are first, import prices, and secondly, and more important, the amount which we add to the prices of imports by the costs which we generate in this country.
§ Mr. Callaghan
This is an important point. If the Chancellor really means what he says, that it is the job of manufacturers to maximise their prices, which is what his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) was saying—the Chancellor agreed that he went a long way with him —[Interruption.] Let me put it this way. Prices are determined by the laws of supply and demand. Does this apply also to wages? If so, what hope is there for an incomes policy?
§ Mr. Maudling
I cannot have made myself clear. I agree that prices are settled by supply and demand and the interaction of the two. What we are trying to do, however, is to increase the supply, by expanding production and to moderate the demand by encouraging moderation in wages and in profits. This is where I do not go all the way with 472 my right hon. Friend, because I think that we can. The essence of an incomes policy is to ensure that the demand factor in the price equation is less than it otherwise would be.
Looking, first, at import prices, obviously there is not much that we can do to influence the level of world prices. Commodity prices have recently been rising, partly because in many cases they have been at a very low level. Recently, there have been particular circumstances, such as the Russian wheat failure, which put up the price of wheat, the sugar crop failure in Cuba and the coffee troubles in Brazil. There are many reasons why import prices have been forced up by external circumstances over which we have no control.
We have, I believe, under the free system which we have, the facility to buy our raw materials as cheaply as any other country and, indeed, more cheaply than many of our competitors. We have the freest market for food in any Western country. The new policies which we are developing are designed, not to put up the general level of food prices, but to bring more stability to the market when excessive fluctuations follow the disposal of overseas surpluses. In recent years, these have produced fluctuations in market prices which have brought little benefit to the consumer but a considerable burden to the taxpayer.
As to import prices, what we must always attempt to do is to give full rein and opportunity to our merchants to search the world for the cheapest sources of supply which they can find. This is a job which they carry out extremely well. The biggest element in the level of prices, however, is the costs which we generate inside this country, and within this the biggest single element is the wage bill. That is a fact, and I do not think anyone will try to get away from it.
I said that one of the ways in which we can work on the level of prices is by encouraging an increase in production, and our whole policy, with the help of N.E.D.C., is to expand the growth of production and to bring more human and physical resources into employment by training and retraining and by the massive measures which we have brought in to stimulate investment in 473 areas of high unemployment, which are beginning to show good results, and by the improvement in the depreciation allowances for industry which are the best system in any of the Western industrial countries.
All these are measures designed and calculated, and certain to produce results, to promote greater efficiency and production. It is along the line of greater efficiency and production that we are most likely to achieve a proper holding of the level of prices. We are also trying to encourage in every way competition. I will not go over the debate of yesterday—[HON. MEMBERS: "Hear, hear."]—because it is still familiar in my mind, but no one can doubt our determination to achieve all that we can in the way of competition bringing its effect on prices.
With regard to what the hon. Gentleman said about tariffs, it is often asked, why not bring down tariffs and put more competition on manufacturers? I have always looked on tariff bargaining rather like Lord Chandos once said: "Look for a quid pro quo and thirty bob pro quo if you can get it." But I would point out that the reducing of tariffs on imported manufactured goods is at variance with putting controls on imported manufactured goods which the party opposite advocates.
The basic requirement is to hold incomes and prices as steady as we can at a period of economic development, when, as I certainly believe, there are very good and possibly unprecedented chances of moving from the present very vigorous rate of expansion to a long-term rate of growth at a level which we have not achieved before. This cannot be done by price controls. We cannot have statutory price controls over a wide area, and, on the whole, price controls tend probably to aggravate the problem because they create scarcities. The basic problem must be to get the level of incomes in line with the level of productivity because it is the balance of supply and demand which settles prices. We can get it right only by providing more supply, and controls do the opposite of that.
Here, I think, the Opposition could perhaps have been a little better employed trying to help forward these matters rather than pursuing the lines 474 which they lave. Take, for example, N.I.C. A lot has been said about N.I.C., but I think that any incomes policy for this country, and it is agreed that we shall need an incomes policy, will require an organisation like N.I.C. for very good reasons. First, because, though it is possible to agree on the general principles, when it comes to applying them to the individual case that is where the difficulty arises. Everyone says 3½ per cent. or 4 per cent. as an average level, with special cases at 6 per cent. or 7 per cent.
How do we give justice to special cases? Often people who have not great battalions to push their interests forward have a claim to justice but not any force. These are the people whose interests we want to watch. I want these cases to remain the exception and not to become the general average.
Equally, of course, the purpose of N.I.C. is to look not merely at wage levels but also at price levels. I have taken particular trouble to ensure that N.I.C. in dealing with the engineering industry should consider in great detail not only the wages side but also the effect of costs and prices. I am glad that this evidence should have been put forward by the Purchasing Officers' Association. That is precisely what N.I.C. was designed to do.
I tried, as I think the Committee is aware, in the National Economic Development Council and elsewhere to get agreement that there should be some interim means of stabilising incomes and prices because it is going to take a long time to work out a complete incomes policy. All Western countries are trying to edge towards such a policy and all find it difficult. In the meanwhile, in the next year or two, with this problem of transition before us and these great opportunities, I should have thought that managements and unions could have combined with the Government to try and find some agreed statement of principles both of wage increases and price increases which would enable the country as a whole to enjoy the benefits of more stable prices. That seems to me to be a very reasonable objective at which to aim, and I hope that the Opposition will support us in it.
§ Mr. Callaghan
The Chancellor will remember what he was told by the 475 General Secretary of the T.U.C. when he asked for a joint statement that we should not increase prices and wages. He said, "That is like saying that the Atlantic is wet and gets you nowhere."
§ Mr. Maudling
He was not prepared to agree to it. It is not very helpful.
We are agreed that we cannot get a complete incomes policy for some time, but why not try to get something? This is what I have been trying to do. I have been trying over the last few months, and my main efforts have been to get agreement between managements, unions and the Government on some method of voluntary restraint of prices and wages——
§ Mr. Maudling
Yes, and rents.
Prices are the key, not profits. If we get prices rising at a reasonable level then the totality of profits cannot go up any more. We must have within industry flexibility and to have only a single level of profitability or dividend increase would be disastrous for the expansion and prosperity of British industry.
The right hon. Gentleman the Leader of the Opposition has admitted this in saying that statutory limitation is not a good thing. We hear of lot about wages and profits. Over the last two years profits were actually falling while wages were rising, and if profits are now rising faster they are only catching up. In fact, profits are now a substantially lower part of the income of the country than they were 10 years ago. Whatever may be said by the party opposite about profits, it is a fact that income from employment, wages and salaries, is now a much larger proportion of our total income than it was 10 years ago. This should not be obscured.
I have talked about import prices and incomes and their effect on the level of prices. I now want to come to two other things before I finish, because they are the other two main factors in the equation. The first is the level of Government expenditure. There can be no doubt that Government expenditure has its effect on prices, and it has been rising rapidly in the last few years and will be rising rapidly again in the coming year. It will not rise so fast 476 as in the year before. It is rising at a rate of something like 6 per cent, or 7 per cent., at a level faster than the long-term growth of the national income, and this is putting an increasingly heavy burden on the economy, from which we do not shrink.
I have made it quite clear that we shall not try to disguise the effect of the level of growth of Government expenditure on the economy. But what about the party opposite. It has a programme which it claims is much bigger than ours. It is more houses—[HON. MEMBERS: "No."]—Yes.
§ Mr. Callaghan
The right hon. Gentleman knows perfectly well that this discussion will be out of order unless the Chairman rules otherwise. The fact is, and he knows it, that he or the Prime Minister has said that we are going to have a figure of 400,000 houses and that he has been told that the construction industry will not be able to meet such a target. We have never committed ourselves to a figure in excess of that because it would be irresponsible so to do. Before the right hon. Gentleman continues, will he particularise and say in relation to what fields the programmes which he has taken over from us—[HON. MEMBERS: "No".]—that is what the argument is about—hospitals, schools and roads. The Government have taken over the programmes which we had enunciated. Will the Chancellor please tell us whether there are any other differences and what other policies of ours he has not yet taken over?
§ Mr. Maudling
That is what I propose to do. I do not think that I would be out of order in referring to the Labour Party's policy on prices. I also referred to houses, however. I thought that the Labour Party wanted to build more houses. Is that not the case? Are hon. Members opposite now saying that the higher rates of Government expenditure on schools and universities are enough? Is our expenditure on roads high enough? How about the Labour Party's pensions plan? Will it cost £800 million or £1,600 million? Hon. Members opposite do not know, or will not 477 say. What about subsidised interest rates to local authorities? What about the National Health Service charges? We have not been told what any of these things would cost.
§ Mr. Callaghan
The prescription charges cost about £66 million in a Budget of £8,000 million. The superannuation scheme, as the right hon. Gentleman knows, is self-financing. He should read the pamphlets if he wants to refer to our policy. I know that he would like to get away from a discussion of his own Government's record, but if he is to tell half-truths he should make sure of his facts.
As for schools, hospitals and roads, he knows that the Government have stepped up their promises in the last six months in terms that they do not intend to honour. Such programmes could not be exceeded by any party with any degree of responsibility. The question at issue is whether the Government will or intend to fulfil their promises. On the basis of their performance in the last 12 years, the answer is "No".
§ Mr. Maudling
This is extremely interesting. The Opposition now accept our roads, schools, hospital and housing programmes—[Interruption.]
§ Mr. Maudling
Our programmes are based on our achievements. If education expenditure is to be further increased, this is because of our achievements so far. If, under the Labour Party's policy, there is to be no increase in taxation as a result of the superannuation scheme and no increase in National Insurance charges we shall be very surprised. That has not been said yet by the party opposite. If "self-financing" means that no one pays, that is fine. If it means, "You all pay", that is another matter.
§ Mr. Callaghan
The right hon. Gentleman is being grossly unfair. The subject was the level of Government finance. I am telling him now—although I am sure that he knows it already—that the superannuation scheme will be self-financing. That has nothing to do with the level of Govern- 478 ment financing. Let the right hon. Gentleman get back to his own record, if he is not too ashamed of it.
§ Mr. Maudling
The hon. Gentleman has not understood the economic argument—the effect of these things is an increased load on the economy.
§ Mr. Maudling
Whatever is put on by way of taxation or social insurance is a load on the economy and will put up prices.
§ Mr. Maudling
Then why not admit it?
We have now got it clear that the Labour Party's programme is no greater than ours o[...], if it is greater, is more expensive. That is self-evident. We should be told which it is. If we are talking about the level of prices, then it is relevant to know. Other factors are also relevant to the level of prices. For instance, the level of savings has increased many times under this Government and nothing makes a greater contribution to the level of prices than the level of savings.
I do not believe that we shall see, under a Labour Government, the level of savings the country has seen during the last few years. [Interruption.] The Labour Party has been saying that we put up prices. We are entitled to prove that their policy will. If the hon. Member for Cardiff, South-East says that I should not do so then what he is saying in effect is that he may attack me but I should not attack him.
Both in terms of expenditure and of the wealth tax, which they are trying to avoid, right hon. and hon. Members opposite have policies which will affect prices in a very bad way indeed. The performance of prices in the last year has been good. The standard of living has risen in 12 years in an unprecedented way. We are fighting the battle of holding down prices, and this depends upon the co-operation of Government, management and unions. One thing is as certain as night follows day. It is that the Labour Party's policy would send prices through the roof.
§ 5.15 p.m.
§ Mrs. Harriet Slater (Stoke-on-Trent, North)
We have just had a fairly good economic lecture—[Interruption.] Wait for it. The right hon. Gentleman was merely using the old language that he has used throughout his years in the Government. What he has missed are the rock-bottom facts of life as they affect the ordinary people.
The Chancellor mentioned Government expenditure on various programmes. Where are the new hospitals we have been promised? Certainly not one has been built in North Staffordshire yet. He was trying to make us believe once more in the Government's promises. We now want to see something more tangible.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was wrong in one respect. This was when he said that the Government were trying to keep wages stable. Perhaps they claim that the trend for the future has been set by the fact that this week they have reduced the salary of one of their Ministers by £500. We have had a succession of different policies from the Government. One year it was, "Let us mend the hole in the purse". Then it was, "You have never had it so good". Now it is the battle to keep prices down. What are the effects of Government policy on prices so far?
Standing at 100 in 1962, the retail price index has risen to 104.7 in the last 12 months—the highest figure ever. The survey of family expenditure shows us that the biggest amounts are spent on food, rent and fuel. Obviously, the rising cost of living falls heaviest on the lower income groups, as is amply shown by food expenditures.
For instance, among those earning between £6 and £10 a week—listening to the right hon. Gentleman one would hardly think that anyone was earning less than £10 a week, but thousands are—the average expenditure on food is £3 4s. 2d. a week. Among those earning over £40 a week the average is £9 4s 1d. a week. So, obviously, any increase in prices of food falls most on those who are already the most needy.
If the Chancellor of the Exchequer wants some figures, let me quote him some of the rises of prices in basic 480 products, in food and clothing and durable goods. Yesterday the Government were asked about increases in bus fares, especially in those areas where the railways are being closed. This is private enterprise and not nationalised industries.
A recent Tory poster depicting what old-age pensioners have received in the last 12 years says, "Shh, we have raised it three times". Let us have some straight talking. They have raised the actual figure of the old-age pension, but, because of the rise in the cost of living and the reduction in the value of the £ since 1951, they have by no means given the increase which they suggest. The value of the £ compared with 1951 is now 13s. 9d. Has not that had an important effect on those in the low income groups? Does that not matter to the old-age pensioner? Is not that the vital figure? Let us have no more "shh", but some straight talking.
I have with me the figures of the increases in prices of basic foods. My hon. Friend the Member for Cardiff, South-East suggested that these increases had been imposed in preparation for the abolition of resale price maintenance, but I suggest that they are also in preparation for the Budget in case Purchase Tax goes up or down. Kellogg's Flakes, now the standard part of most people's break fasts——
§ Mr. Denis Howell (Birmingham, Small Heath) indicated dissent.
§ Mrs. Slater
Oh yes they are. Children especially like the selection. The price has increased by 1½d. on a 12-oz. packet; Quaker Oats have gone up by 1d. on a 24-oz. packet; processed cheese by 1d. on a 1s. 4d. packet; Nescafé instant coffee, the loss-leaders we heard about yesterday, has gone up by 3d. on a 1s. 9d. tin, 5d. on a 3s. 4d., 10d. on a 6s. 4d., and 1s. 8d. on a 12s. 2d. tin. I am told that Maxwell House prices will go up on 30th March. Devon cream has gone up. One of the "big three" frozen food firms, Findus, has raised its prices by 1d. and 2d. according to the size of the packet of vegetables. Horlicks, marmalade, Beecham's, Eno's Fruit Salt, Phensic tablets, soap—Palmolive and Lifebuoy—tooth paste—it gets dearer and dearer to keep clean inside as well as outside—Nestlé's milk chocolate, 481 some biscuits, jellies—all these have become dearer.
Except for the housewife who has to do the weekly shopping, very few of these increases are noticed by hon. Members opposite. It is the woman who sees the prices of basic foods increase. The cost of margarine has risen. No doubt we shall be told that world vegetable oil prices have risen. The prices of butter and other foods have risen. Today my hon. Friends from Scotland asked questions about Scottish milk production being deliberately reduced, which means that the price to the consumer will rise because there will be a shortage of milk.
During the last 10 weeks alone, more than 200 producers of 1,000 separate items have raised prices, and during that time food prices have continued to rise, with a serious effect on the weekly budget. Prices of clothing have also risen. Any hon. Member who has bought a suit or a coat for his wife recently knows how prices of clothing have risen in the last six months. Children's clothing and durable goods have also become dearer, as have carpets and blankets.
We agree with the Chancellor that wages are an important factor in the economy, but wages have not increased at the same rate as increases in the cost of living and the cost of essential commodities in the last 12 months. It has been Government policy to cut meat subsidies, and the result is that Argentine meat prices have risen by 30 per cent. Anybody who buys a joint at the weekend knows that beef and lamb and mutton have become increasingly dearer.
§ Mr. A. Lewis
Is my hon. Friend suggesting that the Government have cut subsidies? Did they not give their pledged word before the last election that they would not cut subsidies?
§ Mrs. Slater
But what their pledged word before the last election was has no bearing on their pledged word since. We are now having other pledges and I am sure that we shall find that they have no weight.
A few weeks ago, the Financial Times said that the cost of wool-nylon carpets, which are becoming very popular, had 482 increased substantially from 59s. 6d. a sq. yd. to 63s. a sq. yd. The price of furniture has risen by between 2½ per cent. to 5 per cent. in the last week. Rents and rates and the cost of buying a new house have all increased. Hon. Members may recall that a few weeks ago my hon. Friend the Member for Eton and Slough (Mr. Brockway) showed that land in the centre of Slough was being sold at £2 million an acre.
Today, I overheard a conversation between two hon. Members, one a Parliamentary Secretary. The other was asking for a service to be provided by a nationalised undertaking and the Parliamentary Secretary said that it was nearly impossible because the price of the land on which the building in question was to be erected had rocketed in the last six months and was continuing to rocket. The price of land thus denies a service to the people of that area. It is happening to Government building and it is happening even more sharply in the building of houses.
A newly married couple buying a new house are faced not only with increased interest rates, but with the increasing price of land which they have to pay before a brick is laid. A fortnight ago, the Chancellor of the Exchequer announced an increase in interest rates and the Alliance Building Society, which had promised a reduction of¼ per cent., was forced to change its mind. The cost of building materials, too, has risen by about 4 per cent.
In some areas, where private enterprise transport undertakings operate, fare increases are being negotiated even though fares in the rural areas, which many hon. Members opposite represent, are particularly high. In addition, all transport companies are faced with the threat that in the Budget there may be a further tax on petrol and oil.
I do not believe that the ordinary people of this country—housewives, working men, old people, the people to whom the hon. Lady the Member for Tyneside (Dame Irene Ward) is always referring, those who live on fixed incomes—are going to be deluded any longer. They are the people who are made to realise, in the cruellest possible way, that the cost of living is rising, and will continue to rise. This rise is due not to an increase in the price of raw materials, but to the Government's policy.
483 Those are the people about whom we are speaking today. Those are the people whom we seek to serve. I am sure that when they read the Chancellor's speech tomorrow they will realise that he did not get down to brass tacks and deal with the problem as they understand it. It is because of that, and because we know that the Government's policy will continue to increase the cost of living, that we shall vote against them tonight.
§ 5.31 p.m.
Sir Henry d'Avigdor-Godsmid (Walsall, South)
It is a pleasure to follow the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater). She is well known in Stoke for the attention which she gives to innumerable causes, and I am glad to pay my tribute to her. I shall not follow the hon. Lady in the details of the prices which she gave of various commodities, because I am sure that she is intimately familiar with them, but I am reminded of the old music hall songI should like to meet the man who pays the woman who pays and pays.I am sure that the hon. Lady would not wish to mislead the Committee. The value of the retirement pension in real terms today is substantially higher than it has even been, and that is not open to contradiction, controversion, or anything else, and it should be clearly on record. I mention that en passant.
§ Mr. Dennis Howell
If the hon. Gentleman believes that to be true, can be explain why more people than ever before are on National Assistance? If what he is saying about the retirement pension is true, why it is that more pensioners than ever before need National Assistance?
§ Sir H. d'Avigdor-Goldsmid
The hon. Gentleman knows as well as I do that the terms of National Assistance have been widened. I shall not debate those two matters because they are not germane to the subject under discussion.
There is always an element of artificiality about these debates on the cost of living. The presence of merely a handful of hon. Members shows how artificial is the interest in this subject in the Committee, though this is the topic in the country today. I am glad that the hon. Member for Cardiff, South-East 484 (Mr. Callaghan) mentioned that in the recent public opinion poll the cost of living was the main problem of 40 per cent. of the people interviewed. This is an important point. It does not seem to be one about which most hon. Members are concerned, but it is certainly one about which our constituents are concerned.
We talk about rising prices as though we as legislators have no responsibility for them. I think that we ought to consider that, because a lot of the things that we do in the House of Commons are responsible for rising prices. My right hon. Friend pointed out that the import bill is something for which we are not responsible. We are not responsible for the changes in the cost of imported raw materials, and it should not be a matter of regret that commodity prices have risen and that many of the less well-developed areas of the globe are benefiting from that rise. Those changes directly affect our prices, and there is no disguising that fact.
My right hon. Friend also talked about Government expenditure. The Government, together with the local authorities, are responsible for 40 per cent. of the total expenditure of this country. That is an enormous proportion, and I wonder whether we are reasonable in our attitude to it. After all, every time we vote money it is spent either on direct benefits to some taxpayer or citizen, or, alternatively, it goes to some form of investment for the future.
For instance, there is to be an increase in expenditure on the educational programme, and I am glad that both parties support this idea. That expenditure will not show any immediate return in economic terms. In other words, we are diverting a high proportion of the country's productive power to an educational programme which, much as we admire it, is an added cost to be borne by the economy. Much the same comment applies to defence. Our defence budget is nearly £2,000 million. Of that sum £1,000 million goes on salaries and about £1,000 million in hardware—I think that is the term of art. That money is taken out of the productive capacity of this country. We in this Committee have a responsibility for that money, because we authorise 485 it to be spent, and I wonder whether, if we were really single-minded in our determination to keep down prices, we would be quite so generous in all these forms of expenditure?
We all have ideas of areas in which reductions could be made, and I shall suggest a few later in my speech, but one thing that we know is that if we want prices to be stabilised, or even to come down, it is not difficult to achieve that. We had that from 1931 until the war, and we had it at the cost of great hardship indeed. I am sure that no one on either side of the Committee would want to return to that state of affairs, but that is a means of reducing the cost of living.
I remember in June, 1940, having the best meal that I have ever had in a restaurant car. It was an excellent meal for the simple reason that all the restaurant cars were being taken out of service and they were dishing up their reserves of good quality food. That is the sort of thing which brings down prices. In much the same way one would could get prices down in industry. Prices in industry do not fall because of a slackness in trade, because even if trade is slack people put their finished products by for a future occasion. Prices come down when there are bankruptcies and when goods are sold on the market for what they will fetch. If we in this Committee are so set on bringing down prices, as some of the speeches from hon. Gentlemen opposite seem to suggest, I wonder whether we are prepared to accept the implications of that, which would mean a considerable amount of slack in the economy, and a considerable number of failures and bankruptcies.
§ Mr. H. Hynd (Accrington)
The hon. Gentleman is getting away from the good point that he was making about the responsibility of the House of Commons for increasing the cost of living. Is the hon. Gentleman not going to say anything about our responsibility for increasing rents as a result of the Rent Act?
§ Sir H. d'Avigdor-Goldsmid
I am obliged to the hon. Gentleman for that interruption, because these remedies lie with the House of Commons, and perhaps specifically with the Government.
486 The hon. Member for Cardiff, South-East told us about his plans for when he is or is not Chancellor in the next Administration. I should like to leave him a single thought. Recently we have been asked to give our views about the remuneration of Members. Would not it be an encouragement to our constituents if the Government responsible for implementing the new policy fixed an appropriate figure for the remuneration of Members and reduced it in proportion to any rise in the cost of living? That would bring the facts of life home to all Members. Perhaps I should go further and say that that should apply only to Members supporting the Government party. That would be an interesting thesis, and would be a real earnest of their determination to keep prices stable.
I do not want to embark on too many details, but I think that this is a pleasant thought. If hon. Members are genuinely interested in the cost of living and in preventing it from going up, I think that they ought to accept this voluntary limitation on their salaries in the future when they are reviewed. I suspect that some statement to this effect in either side's election manifesto, or both, would be a great encouragement to the housewife and to the people who are suffering most from the cost of living.
§ Mr. A. Lewis
Could not the hon. Gentleman go one step further and suggest to the various ex-Ministers, particularly the ex-Minister of Defence who has taken a job at about £15,000 a year, and who attends the House only when there is a defence debate, that if they dropped their £10,000 or £15,000 a year into the Exchequer kitty, it would total up and could be used to pay those Members who have no other means? If hon. Members opposite did that and shared it out, we would do very well.
§ Sir H. d'Avigdor-Goldsmid
The hon. Gentleman can make that point in the questionnaire that has been sent to him.
§ 5.41 p.m.
§ Mr. Richard Marsh (Greenwich)
I have been wondering for some time whether the hon. Member for Walsall, South (Sir. H. d'Avigdor-Goldsmid) was serious in his proposition. I am still not too sure whether he meant it seriously. The hon. Member's commercial interests, 487 which are, of course, entirely his own business, would, I should have thought, have marginally rather more effect on higher prices to the housewife than the marginal effect of increases in hon. Members' salaries. He might perhaps be able in his own field to see what he can do.
The thing that worries me most about this debate, and which has worried me when we have debated this subject before, is the extent to which it becomes obvious that right hon. and hon. Members opposite do not realise that there is a problem. If more evidence of this was required I think that it was given yesterday in the Aims of Industry national Gallup poll, because the Government and the Conservative Party as a whole have decided quite clearly to base their electoral campaign on the issues which they think will give them the most votes. The effect of this policy on the defence of the country does not seem to some of them to be important so long as they can get the votes on the way.
They are prepared to pay a high price with this country's prestige in the process. They put first the independent nuclear deterrent. In the Gallup poll conducted by Aims of Industry, which is not sympathetic to the Labour Party on the whole, the independent nuclear deterrent was at the bottom of the list in the public mind. The other campaign which they are pursuing is on nationalisation. In the Aims of Industry survey, this comes, I think, seventh in the list of 10 items in the public mind. [Interruption.] If the hon. Member would look carefully into the figures presented he would find that the number of people in that survey in favour of nationalisation, state control and public ownership are substantially more than half the population.
I can see that the hon. Member's statistic abilities are on a par with those of the Prime Minister. We in fact find that a large proportion of people do not regard nationalisation as a big issue. I am not arguing this point, but I think that there is a simple reason for it. For anyone of my generation or younger it is not a party political issue. The reason for this is that people younger than I am have only seen nationalised industries administered by a Conservative Govern- 488 ment. It is not a party political issue to them.
The most significant thing of all is that the item at the top of that poll in the public mind is the cost of living, and is the one item which the Government do not recognise as having serious political consequences. I think there is a great deal in this and that it is significant that the one item above all others which affects and worries the mass of the population of this country is the item which the Government have not noticed at all as affecting them. It seems that the hon. Member is likely to explode, so I will give way.
§ Sir S. McAdden
If one asks people the same question in different words three times it is not mathematically accurate to add up three lots of answers and to say that they are answers to different questions, because they are not.
§ Mr. Marsh
They are all different figures, and they are from different numbers of people. The one thing that emerges from this survey is that what people want, in economic terms, is more planning. They might be confused about the different forms of public ownership, but what emerges from this is that the Government and hon. Members opposite do not realise the very real hardship and the very strong feeling that exist in the country about the rising cost of living. If the "Minister of Propaganda" were getting paid out of Conservative Party funds instead of out of the taxpayers' fund, I think that it would be justified in sacking him, because clearly on this issue he has missed the point entirely.
The Chancellor's speech was another example. Everyone recognises the Chancellor's economic ability and knowledge, but he clearly did not regard this as a particularly important issue. I know that he had a bit of a knock about what the Labour Party was doing in 1945, or 1946, or 1947, but let me say one thing about what the Labour Party was doing in those years. When the Labour Government left office in 1951 Britain was the greatest industrial Power in the world outside the Soviet Union and the United States of America. I do not think that many hon. Members would suggest that that is the position today.
§ Captain W. Elliot
Surely the hon. Gentleman realises that Germany and Japan were absolutely bombed flat at that time?
§ Mr. Marsh
Whatever the reason, this country started off in 1951 when the Labour Government went out of office with a vast lead over any other industrial power outside the Soviet Union and the U.S.A.
Of course, there were many other reasons. I do not deny that for a moment. But I am saying that this is what the Government inherited in 1951. Today, Britain is by no means one of the supreme industrial Powers. I do not think that hon. Members opposite would argue about that.
§ Sir S. McAdden
If the position was so good—if the economy was so strong, and we were the leading industrial country with the exception of the United States and the Soviet Union—why on earth did the hon. Member's Government resign? Why did not they carry on?
§ Sir Peter Roberts (Sheffield, Heeley) rose——
§ Mr. Marsh
I am sorry, but I must get an odd word in between interventions. The Chancellor showed a healthy contempt for these league tables, and quoted last year's figures concerning the cost of living rises in comparable countries. But after 12 years of this Government, and at this distance from the end of the war, we are entitled to compare British performance today in relation to that of our competitors in the rest of the world.
I asked the right hon. Gentleman not to give last year's figures of increases in the cost of living but the ten years' figures for 1951–62, in comparison with those of other industrial countries. I chose that period, first, because we cannot obtain an accurate picture from one year's figures and, secondly, because an entire report on this subject has been 490 issued by O.E.C.D. comparatively recently.
The report shows that increases in consumer prices from 1951 to 1962 were as follows: France, 60 per cent.; Britain, 48 per cent.; Sweden, 46 per cent.; Norway, 44 per cent.; Holland, 27 per cent.; Italy, 27 per cent.; West Germany, [9 per cent.; the United States of America, 17 per cent.; Canada, 15 per cent; and Belgium, 14 per cent. I repeat that the British figure was 48 per cent.] would have thought that this was something with which no Government could be satisfied.
The hon. Member for Louth (Sir C. Osborne), with whom I hope to disagree on most things, has fought almost alone among his colleagues to bring home the fact that we cannot exist in a vacuum compared with other industrialised countries, and that the rise in consumer prices in this country is greater than in any comparable industrial Power, with the exception of France. This worries many people, and it obviously worries my hon. Friends. It also obviously worries the great mass of the British population, but it clearly has not even registered with the Government Front Bench.
Reference was made by my right hon. Friend to the report of the Purchasing Officers' Association. My party is receiving electoral assistance from the most extraordinary quarters, which we should acknowledge. The right hon. Member for Bexley (Mr. Heath) has been of great value to us, and I hope that he will be given some sort of recognition for his efforts on our behalf in recent months. I hope that he gets a peerage. He certainly will not be back here.
The hon. Member for Reading (Mr. Peter Emery), who is the Director of the Purchasing Officers' Association, has also done a very good job for us through his organisation. When the Government recognise the problem of rising consumer prices they always say that it is the result of trade union pressure for higher wares. But the report shows that wage rises are not the prime factor in this problem.
Furthermore, hon. Members on both sides of the Committee who are fairly comfortably off under-estimate just how much real poverty exists in this country. 491 It is a different type of poverty from that which used to exist. There are not millions of bare-footed children in the streets, and there are no soup kitchens in the streets—although in one area there were a few months ago. The poverty that exists today is the poverty of those who cannot defend themselves economically and who rely upon the State, only to find that the State will not give them a decent standard of living.
Let us leave out any argument of who did which, when. I challenge any hon. Member to suggest that a retirement pensioner with no other source of income leads anything other than a squalid, deprived life. I do not know whether any hon. Member is prepared to challenge that statement.
§ Sir Cyril Osborne (Louth)
I agree with that, but if we are to present a proper picture of our country's position in the world we ought to remember the background, part of which is the fact that 270 million people in India are said to be living on 3½d. a day. It is against that background that we must consider our position.
§ Mr. Marsh
I do not want to take that argument too far. I would only say that poverty is obviously infinitely greater in the under-developed areas. But poverty is even more criminal in a country which boasts of its affluence but still does not make provision for those who cannot look after themselves than it is in a country which does not have the resources to do so anyhow.
The last Ministry of Labour Gazette survey of the earnings of adult full-time males over the age of 21 stated that 27.89 per cent. were earning less than £12 per week gross. In other words, nearly one-third of our total working population in full-time employment was earning less than £12 per week gross. I am open to correction, but I do not think that any hon. Member on either side of the Committee would deny that with a gross income of that sort it is impossible to lead a comfortable and reasonable life in this country.
It is argued that this is the result of the high standards of British workmen. Hon. Members opposite seem to believe that work on the mainland of 492 Europe is carried out entirely by coolie labour, which works for a handful of rise. In fact, the conditions of British workmen do not measure up to those of their European competitors. I now want to refer to the United Nations Bulletin of Statistics. I am sorry to quote so many figures, but there are so many myths on this subject. The United Nations Bulletin on manufacturing industry shows that last year, on the average, the working week in Japan was 49.2 hours; in Britain it was 46.2 hours; in France, 45.8; in Switzerland, 45.6; in Germany, 44.7; in Austria, 42.6; in Canada, 40.7, and in the United States of America, 40.4.
It is clear that the British worker works one of the longest working weeks in all the industrialised countries. We therefore have a situation in which prices are rising faster than in other comparable industrial countries, but in which that rise is not due to the fact that British workmen have much better conditions than workmen on the Continent. It is clear, too, that as a result of this situation the section of the community which is least able to look after itself has to face severe hardship.
§ Mr. Marsh
I am glad to hear the hon. and gallant Gentleman say "Hear, hear". I would have thought that the economic contributions of the Prime Minister would worry hon. Members opposite even more than it worries us. The Prime Minister decided to make a speech on economics. Talk about Nero fiddling while Rome burned! I should have thought that his exercise in Coventry last night, when a battle was going on here, was a pretty fair example of this. The Prime Minister is quoted as saying last night—he had gone into this—The Government's economic policy can be summed up in three words, Neddy, steady, go".Well, really! Hon. Gentlemen opposite may well look a bit worried. But that is the contribution which we got from the right hon. Gentleman, and it is the sort of contribution which we have come to expect from him. He went on to say something which I think is even more serious. He gave another example of what he thought was the reason for all this. He was attacking nationalisation. 493 He said that nationalisation tended to create a rigid, top-heavy, bureaucratic organisation. It meant less efficiency at higher cost.
How many nationalised industries do hon. Gentlemen opposite intend to denationalise? This is important. If they do not intend to denationalise them, do they honestly think that this sort of denigration of massive British industries, of a most important section of the British economy, is of any value to the community at all? When we have industries as big economically as the National Coal Board, and the electricity and gas undertakings, do they think that it does any good whatever for the Prime Minister to denigrate them to this extent in public? I should think that State-owned industries pose a simple problem to the Government in power. Either the Government should hand them back to private industry—and, by heaven, it would be interesting to see the economic repercussions if the Government tried to do that—or those people carrying out the difficult tasks confronting the industries should be entitled to expect some degree of loyalty and support from the Government who control their industry. I hope that we shall hear less about that kind of thing.
§ Mr. A. E. Cooper (Ilford, South)
Will the hon. Gentleman tell the House and the country what percentage of our exports are contributed by the nationalised industries?
§ Mr. Marsh
One of the things which worries a lot of people is the belief that a large section of the management of British industry is hopelessly inefficient, and when one hears the economic contributions of some people who hold directorships in private industry, this fear is rapidly confirmed. The hon. Member for Ilford, South (Mr. Cooper) does not realise it, but we cannot export without basic materials. How does he think that the privately-owned steel industry would manage without the nationalised coal industry; or how either industry could produce anything without the transport services? He has 494 an extraordinary idea of elementary economics. May I say, for the benefit of the hon. Gentleman, that these industries represent about 20 per cent. of the British national economy—I am now attacking the Government which was yesterday attacked by the hon. Member for Cleveland (Mr. Proud-foot)——
§ Mr. Wilfred Proudfoot (Cleveland) rose——
§ Mr. Marsh
I am sorry, I do the hon. Gentleman an injustice. There were so few supporters of the Government yesterday that I had overlooked the fact that he was one of them.
The nationalised industries make a major contribution to the economy of this country and I am surprised that this should be challenged. The argument was dealt with clearly in the Financial Times recently by George Cyriax, who showed that the nationalised industries are doing a great deal to hold down prices—a very great deal. I quote from the article:The Board of Trade's census shows that engineering costs break down roughly into 40 per cent labour charges, 40 per cent. material costs and 20 per cent. overheads; the variations in the abour element are in the range of 33 per cent. to 40 per cent. with surprisingly few companies outside it. Thus a 5 per cent. addition to labour costs would at the outside add 2 per cent. to manufacturing costs.The reaction of the engineering employers after they granted the engineering workers wage increases was immediate. In heavy engineering, castings, forgings, transformers and machined goods, price increases to the Coal Board were immediately set at between 3½per cent. and 5 per cent. In fact, the engineering wage increase was used by the engineering employers as an excuse to increase their prices to something like 5 per cent. to meet wage increases which would affect manufacturing costs by only about 1 per cent. The lead given in challenging that came, more than anywhere else, from the National Coal Board and Lord Robens. I think that the nationalised industries have done a good job.
It is a pity that hon. Gentlemen opposite do not attack those sections of privately-owned industry which are blatantly profiteering in this way, instead of just griping about the nationalised industries for which they 495 have to accept responsibility—because they are responsible for them—and which are doing a great deal to try to keep down prices.
I wish to say something about wage increases because these are always referred to. The problem is that wage claims are always settled in the full glare of publicity. Therefore, a great deal of feeling is whipped up about them. It is also a problem that in this country—as is the case in few other countries—the straight division between the two political parties leads hon. Gentlemen opposite to use attacks on the trade union movement as political weapons. I do not think that anyone would deny this. Hon. Gentlemen opposite recognise that in the public mind the Labour Party and the trade unions are very closely allied together——
§ Mr. Marsh
I agree with my hon. Friend. Not only ought they to be but in this political set-up it is impossible to divide them. I wish that everyone in the T.U.C. agreed with that argument.
There is a permanent attempt to create a picture of the trade unions as being worse than they are and there are criticisms of wage increases, but I believe that the contribution by the trade unions to high prices as a result of wage increases has been greatly exaggerated. I say this because Mr. Martell and his New Daily are always trying to whip up feeling about this. They have asked over and over again for a commission of inquiry into the trade union movement. Speaking only for myself, I think that that would be a jolly good idea. I think it a good idea because I consider that the British trade union movement has a very good case which has never been put across to the British electorate.
I should like to see this argued out, particularly since we shall have to have a review of the law in view of the case of Rookes v. Barnard anyhow. So far as I am concerned, the more the facts—as distinct from the myths—are argued about constructively and the more the facts about the British workers' standard of living in relation to his colleagues on the Continent are brought out and the 496 more people realise the very real changes that the trade union movement has undertaken in recent years, and the positive contribution it makes to our economic life, the better it will be for the trade union movement and the Labour Party, because in this matter we have a very good case.
§ Mr. Monslow
I take it that my hon. Friend would couple with that an inquiry into the range of profits and dividends.
§ Mr. Marsh
That is an entirely different thing. I am now arguing the trade union movement per se. A wages policy is essential and we cannot have a wages policy unless we control prices, profits and rents. That is axiomatic.
I have spoken longer than I intended, but I was led astray at the beginning of my speech. This problem of rising prices is a serious one, and one which the Government have failed to face for 12 years, but the most worrying thing is that, after 12 years, they do not even recognise its existence.
§ 6.10 p.m.
§ Sir Cyril Osborne (Louth)
The hon. Member for Cardiff, South-East (Mr. Callaghan), who opened the debate for the Opposition, made, I thought, a formidable case on internal affairs. Some of the figures he gave about purchases by Cardiff City Council are so outrageous that they should be investigated.
I agree with the hon. Member that our national distribution costs are far too high. I also agree with him that the amount of competition in the home market among our own manufacturers is far too small. We should get prices down a great deal more if there were fiercer competition in the home market. To that, extent I agree with the case that was made.
I turn to another aspect of the problem. The hon. Member ignored the overseas position. We live in a world of inflation. No Government of any kind can insulate us from the inflationary forces which are affecting all the industrial nations. We have to import practically 100 per cent. of our raw materials. The prices of those raw materials are an important factor in our cost of living, through what we have to pay ultimately for them in the shops.
Hon. Members on both sides of the Committee from time to time urge that 497 we should do more to help the underdeveloped countries, the poorer Afro-Asian countries. There is only one practical way in which we can help them. That is by paying more money to them for the raw materials they produce for us. The terms of trade in the last 12 or 15 years have moved enormously in our favour. Our riches have been built on their poverty.
Hon. Members must face the results of this. If we are to see that the poorer nations of the world get fairer treatment, we have to pay them more for the lead, zinc, copper or oil that they produce for us. Their costs are going up and our cost of living inevitably must be affected. It is this aspect I wish to put to the Committee.
People outside the House are not interested in what I call narrow party bickerings about whether inflation was greater under the Labour Government than it is under the Conservative Government. What they want to know is: what is the cause of inflation? What can be done to keep it down, and why are we not taking action to keep it down? They are not interested in whether, under Socialism, it went up by, say, 40 per cent. and, under the Tories, went up by 32 per cent. That does not affect them. They want to know what we are doing now to control it and, if not, why we are not doing it. I wish to call the attention of the Committee to this problem.
Hon. Members on both sides would agree with this one basic truth, that any nation which tries to live beyond its means by spending more than it is earning must inevitably run into inflation. That truth applied in classical times, in Roman times. It applies under every political system and in every country in the world. If we try to live beyond our means the cost of living must go up. No one can stop it.
§ Mr. Monslow
Will the hon. Member agree that we are spending in this country much more on non-productive services than we ought and, therefore, we cannot spend on what are known as the social services? We cannot do both.
§ Sir C. Osborne
Of course I agree with that. If we were to go, as the late Aneurin Bevan said he would never go, into an international conference naked—if we became pacifists and spent 498 nothing on defence—we could spend more on social benefits, but who would defend us? I am sure that the hon. Member for Barrow-in-Furness (Mr. Monslow) does not mean that in its extreme. There is a nice balance, but that is lot the problem. The problem is whether we are trying to spend more than we are earning. The truth of this cannot be avoided by any party which holds power.
To begin, I shall tackle the question of wages and salaries, and will give some facts to support my case. I think that it is admitted that, if wages and salaries rise faster than productivity, what those wages and salaries produce must cost more. Surely we all agree on that. I agree with hon. Members opposite that there can be no control of inflation without an incomes policy. There can be no incomes policy without control of wages and salaries, but, equally, there can be no control of wages and salaries unless all other incomes are controlled in the same way. I have said this at Conservative Party conferences, in the House, and in the Press, time and time again.
I shall give hon. Members a few figures about wages and salaries in this country. In 1946, they amounted to £4,940 million. In 1962, wages and salaries had gone up to £15,420 million. These are official figures. They are more than three times what they were in 1946. That was the first normal year after the war. Physical productivity may be up by roughly 50 per cent. Therefore, the inflationary forces engendered by this trebling in wages and salaries represents 100 per cent. The value of the £ has fallen from 20s. in 1946 to 10s. 3d. today. The correlation between the amount paid out in wages and salaries between 1946 and 1962 is exactly the same as the depreciation in the value of the internal purchasing power of the £.
Hon members may like to bear the following figures in mind. The average earnings per week in 1946 compared with those in October, 1963, were as follows: men 120s. 9d., today, 334s. 11d. These are Ministry of Labour official figures. For boys, they went up from 46s. 6d. to 148s. 6d. For women, they went up from 65s. 3d. to 168s. 3d. For girls, they 499 went up from 38s. 8d. to 109s. 2d. If we continue to pay ourselves more and more for doing the same work, obviously inflation must result and the cost of living must go up.
§ Sir C. Osborne
Please allow me to make my speech; I am trying to be fair and factual.
The Leader of the Opposition—I gave him notice that I would refer to him—has already threatened that if his party is returned to power, and he becomes Prime Minister, he will restrict profits, dividends, rents and other personal incomes and also impose additional savage taxes.
§ Sir C. Osborne
Please allow me to make my speech. The right hon. Gentleman will impose extra taxes. [An HON. MEMBER: "Did he say 'savage'?"] Please allow me to speak. If I am paying those taxes, then, whatever they are I shall think them savage. It depends on which side of the fence one is, whether one is the person imposing the taxes or the person paying them.
I ask the hon. Member for Sheffield, Hillsborough (Mr. Darling), for whose fairness of mind I have great respect, to ask his Leader to give an election pledge that if the Labour Party, unhappily, from my point of view, is returned at the next election—which seems to be becoming less and less likely—he will give an undertaking to impose restraint on wages and salaries similar to that which he proposes to impose on all other forms of income?
This is very important. Social justice demands it. In the White Paper of 1961 on the economy it was stated that of our total average industrial costs, 62 per cent. arose directly and indirectly from labour costs. In the cost of living through the shops, therefore, the labour costs are the most important factor.
It seems to me that to pretend that we can impose a ban on other forms of 500 income and yet leave wages and salaries to rise would not work and would be monstrously unjust. In considering the proportion of the national income which is taken in salaries and wages, two interesting facts arise. Wages and salaries took 56 per cent. of the total personal incomes for the nation in 1946, and last year they took 65 per cent. Thus, wages and salaries are taking a bigger proportion of a bigger cake. That is why I say that the crux of the matter, if we are to control inflation, must lie with wages and salaries, for if we control the other factors, and leave wages and salaries alone, we shall never find an answer to the problem.
On Monday night, the Leader of the Opposition was on "Panorama" and was questioned by Mr. Robin Day.
§ Sir C. Osborne
The Leader of the Opposition claimed, I think justly, that all the trade unions had wholeheartedly—this was his word—endorsed the incomes policy at the Labour Party conference. That is good as far as it goes, but I put it to hon. Members who know the trade union movement that it does not go far enough. In fact, it goes nowhere, because the T.U.C. is like the Labour Party, if I may say so without offence; it is filled with well-meaning, public-spirited, elderly gentlemen who politically are fat and flabby, who are virtuous, innocent, but impotent.
§ Sir C. Osborne
The T.U.C. has no power whatever to bind the constituent unions and it cannot compel them to honour any obligations which it enters into with N.E.D.C., the Government, or the employers on the control of wages upon which is based our effort to control inflation.
The T.U.C.—I say this without offence—is the great eunuch of British politics. It can do nothing, absolutely nothing. The real power lies with the separate unions, and any trade unionist knows this to be true. But it does not lie even with the nominal leaders of the unions. To a large extent, unhappily, it lies with the shop stewards' movement, over 501 which even the leaders of the separate unions have no control, and over which the Labour Party has no control, either.
I am stating the case. I am not blaming anyone. I am asking my hon. Friend the Member for Hillsborough—if he will allow me to call him so—to ask his right hon. Friend the Leader of the Opposition this question: when it comes to the election pledges, will the Labour Party, in its manifesto, say that it will control all forms of income in order to keep prices down? And will he get the great leaders of the trade unions, such as Frank Cousins, "Ted" Hill and Sir William Carron, to support him openly in a statement that they agree with it?
§ Mr. Joseph Slater (Sedgefield)
The hon. Member is asking my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) to put some questions to my right hon. Friend the Leader of the Opposition on behalf of hon. Members opposite. Will he do the same for my hon. Friends, by asking the Prime Minister when he will answer the questions which the Leader of the Opposition has already put to him?
§ Sir C. Osborne
I have been a backbench Member for nearly 20 years, and I do not pretend to have the influence with my right hon. Friend which the hon. Member for Hillsborough has with the Leader of the Opposition. But I think that it is on record that in the 20 years I have been in the House I have never failed to push this point of view hard—both in the House and outside.
On Monday, The Times had an extraordinary article which I am sure hon. Members opposite read. It is headed:Trump Card Labour Cannot Play".It supports the contention which I wish to put forward—unless I am told that I am out of order. It is that the only way to control inflation is to control wages. That is the point which I am making. This article, which I commend to hon. Members opposite, said:Mr. Wilson and his colleagues would then play their trump card—the firm commitment"—502 for which I have been asking—of the trade union movement to support a Labour Government in a policy of incomes restraint, coffering wages and salaries as well as profits and rents, so that treasure may be laid aside for buying seed corn today in expectation of a richer harvest for everybody tomorrow".That is sound common sense, which I wish both parties would support. I ask hon. Members opposite, as The Times asked them, why cannot they play that card?
§ Sir C. Osborne
I will prove that the Labour Party has not. Hon. Members opposite claim that they are closely associated with the unions—and I do not deny that. One of the things which they have to do is to teach the unions that they have no divine right to a wage increase every year. A demand for one is being put in practically every year, irrespective——
§ Sir C. Osborne
Because it puts up the cost of living. The Leader of the Labour Party, at his party's conference in October, 1953, with great courage warned his followers of two things,—that automation would kill 10 million jobs and that it would be necessary for us to create 10 million jobs in the next decade; and that there was no room for Luddites in the Labour Party. How much notice did the unions take of that talk? None at all. It did not influence the unions a tiny bit.
Let me give two examples. Only a few weeks ago the great printing house which prints the two Labour newspapers, the Daily Mirror and the Daily Herald, was trying to bring in the first steps of automation to bring the printing works up to date. What happened? The unions decided to go slow. What was the result? The Daily Mirror was short of 1 million copies a days and the Daily Herald was short of 50,000 copies. This happened because the unions, over which the Labour Party has no control, disregarded the advice of the Leader of the Opposition. They applied the Luddite system at its worse and fiercest, despite the right hon. Gentleman's advice.
§ Mr. George Darling (Sheffield, Hillsborough)
I am sure that the hon. Gentleman is aware that he is referring to a 503 special case, involving part-time employees. I strongly object to the part-time employment system on full-time contracts in the printing industry. Is he aware that the workers objected to the arrangement made by their union leaders? Is he arguing that over the whole range of industry unions are opposing the introduction of new methods, because if he is, that is untrue? How, if we have made progress with automation in industry, has progress been made if the trade unions have not given their full co-operation in these matters?
§ Sir C. Osborne
At this very moment a strike is going on in my home town because the Raleigh Cycle Company has introduced methods to improve the means of production which will help to reduce our cost of living. By increasing our exports and reducing the prices of the goods we produce we will succeed in increasing our standard of living.
Yesterday this item appeared in the Daily Express:Angry wives are appealing to the Queen to help them break a nine-week-old strike.The Daily Express reported one of the women to have said:May I please appeal to you as a wife and mother to intervene in the Raleigh works strike … It is causing much hardship to many families and children. I am making this desperate appeal on behalf of wives whose husbands are out of work through this strike.The report added:… the 2,000 laid off because of the strike by 450 Amalgamated Engineering Union members over the redundancy of 25 men …The Leader of the Opposition made his appeal at the Labour Party's conference. The trade union leaders came to the rostrum and agreed with him, but what can right hon. and hon. Gentlemen opposite do about the sort of events I am describing? It is obvious— 504 [Interruption.] It is all very well for hon. Members opposite to make a noise, but what protest has the Leader of the Opposition made about this folly? He has kept silent. Not a word has he uttered and we see that the party opposite is utterly impotent in this matter; it is a eunuch.
§ Several Hon. Members rose——
§ Mr. Darling
The hon. Gentleman is saying that because of redundancy that was to be caused by new methods of production the men came out on unofficial strike when they should not have done that. I agree with him, but he should agree with me that there is another side to the coin. Is he suggesting that when a management wants to introduce new methods there should be no proper discussion with the workers and trade unions concerned? The complaint at the Raleigh works concerns Tube Investments, which has been responsible for this, because there were no proper negotiations. Whether or not the men were right I do not know, but until the position is made absolutely clear the hon. Gentleman should not make these charges.
§ Sir C. Osborne
I will clear the matter up straight away. This is what the Daily Express said on this point——
§ Sir C. Osborne
The Daily Express stated:It is obvious to everyone that the company cannot make any concessions to the A.E.U. without breaking faith with other unions which have accepted redundancy.This shows that the matter was discussed with the other unions.
§ Mr. Darling indicated dissent.
§ Sir C. Osborne
It is no good the hon. Gentleman shaking his silly head at me. I am explaining why the cost of living continues to rise. Hon. Gentlemen opposite keep on kidding themselves that they have control of the unions when they have no influence over them at all.
§ Sir C. Osborne
I am sorry that the hon. Gentleman thinks it is silly, but he must face the facts.
In the speech of the Leader of the Opposition, at Liverpool, as reported in The Times, he dealt with the question of rising costs and the growth in the cost of living. Having done that, he said that a Labour Government would demand the removal of the Health Service prescription charges and would provide free bus rides for old-age pensioners. If these things are to be done, the cost of living must go up because someone must pay for them. To my mind, that sort of statement is the cheapest form of political bribery, bribery which hon. Gentlemen opposite accuse my right hon. and hon. Friends of indulging in.
§ Sir C. Osborne
I have no reason to be ashamed. I am speaking the truth. If hon. Members opposite do not like to hear the truth, that is not my business. The Leader of the Opposition said that he wanted prescription charges removed. That is bound to put up taxes which, ultimately, will increase the cost of living.
I vividly recall what happened in 1951, when prescription charges were being discussed and when right hon. and hon. Gentlemen opposite fought against them tooth and nail. Three members of the then Labour Cabinet stormed out of the Cabinet over this very subject. This is what the Daily Herald said about the present Leader of the Opposition and his actions at that time:Mr. Harold Wilson yesterday explained to the House of Commons why he has resigned from the Cabinet.The Daily Herald's carefully considered opinion of the gentleman about whom it was writing—the right hon. Gentleman who hopes to be the next Prime Minister—was this, and I hope that the electorate will bear these words in mind:The curious thing about Mr. Wilson's attitude is its lack of perspective".What a recommendation for a fellow who wants to be Prime Minister [Interruption.]
§ Sir C. Osborne
That is not what I am saying, but what was said in a Daily Herald editorial. That newspaper added:If the security of Britain is priority number one, how can a responsible man shrug his shoulders at the prospect of insecurity and choose free false teeth as a consolation prize"?Today, it is not false teeth the right hon. Gentleman is choosing, but free prescriptions. In those days the Chancellor of the Exchequer was the late Hugh Gaitskell.
§ Mr. J. J. Mendelson (Penistone)
If the hon. Gentleman is saying that to be in favour of free travel passes for old-age pensioners is political bribery, will he ask some of his hon. Friends, including the hon. Member for Sheffield, Heeley (Sir P. Roberts), if they are opposed to the giving of free passes in Sheffield and other parts of the country?
§ Sir C. Osborne
I am dealing with the Opposition and not my hon. Friends. Apparently hon. Members opposite cannot take it.
The last serious attempt made to control profits, wages and prices was made by Sir Stafford Cripps in 1947–48 and for two years his efforts were partially successful. Dividends, profits and wages were kept level for two years after an appeal made at that time by Sir Stafford. I would remind hon. Members opposite what Sir Stafford said on this issue in the HouseAny worker by hand or brain who goes slow, or is an absentee, or demands more money for no more output, is, in fact, doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job.—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 31–2.]Will the hon. Gentleman say that to his people now? Has he the courage to say what Cripps said? I will give way to him, if he wishes—
§ Mr. Osborne
Sir Stafford Cripps spoke the truth fearlessly as he saw it, and it nay be that he was expelled from the Labour Party for doing so—[Interruption.] What Cripps said then is still as true today, and I ask hon. Members opposite to face the realities of the position as he did. If we go slow—on either side of industry—if we demand more than we earn, we put up 507 our own bills and put ourselves out of a job. Hugh Gaitskell supported the Cripps line. Are the present leaders of the Opposition also prepared to do that?
§ 6.41 p.m.
§ Miss Margaret Herbison (Lanarkshire, North)
I do not know whether it is worth while taking up the points made by the hon. Member for Louth (Sir C. Osborne). [HON. MEMBERS: "No."] In all my time in this House I have never listened to so much humbug. Whatever the hon. Gentleman examined, he looked only at one side of the coin and never turned to the other side to try to get a true picture.
He told us that it is an "inflating world"—those were his words—and he seems to think that any Government would be quite helpless in the face of that kind of inflation. I can only say to him that during the 12 years his Government have been in power, just a few months before an election we get an expansion that leads us bang up against inflation, then the brakes go on immediately after the election, and great hardship follows.
The hon. Gentleman, who is so good at reading the Daily Express and the Daily Herald, might look at some of the literature that has come from Transport House, from which he will learn that the only way we will ever have a chance of coping with inflation—and we on this side know that it is not an easy matter—is by a determination to plan our economy and our industry. The present Government have been paying some lip-service in the last year to planning, but it has been only lip-service. Now, after a short-term boost, we get the Bank Rate raised one week and threats in the following week from the Chancellor of the Exchequer of higher taxation in his Budget.
The hon. Member for Louth spoke at length on the effect of rises in wages and salaries, but said not a word about the effect of rises in rents, profits and all those things that play such an important part in the inflationary aspect of the economy. He seemed to have come to the conclusion that there was no doubt that his party would lose the election. He decided that there was no point in directing questions to his own Front Bench, so he directed them all to 508 ours. It is very evident that he has already decided which party will win.
The Chancellor of the Exchequer told us that we must not talk just about the cost of living but also about the standard of living. The present Government would be worse even than I think they are if, almost 20 years after the Second World War, there had not been some betterment in the standard of living. Nevertheless, when we compare our standard of living with that of the workers in almost every Western European country we find that, in the main, we are falling behind.
Again, I thought it very strange that the hon. Member for Louth should seek to make it appear that he was whole-heartedly in support of Sir Stafford Cripps. When I was on the benches opposite, I can well remember the kind of life the Tory Opposition gave Sir Stafford Cripps. That was when we were trying to do what the hon. Gentleman tells us we should do next time—make sure we have the seed corn. There was no support from the Opposition of the day—"Austerity Cripps" was the name they gave Sir Stafford. We were "Tired Tims and Weary Willies". That was the sort of support we got from the Opposition, but our Ministers showed far more courage than we have found in Conservative Ministers in the last 12 years——
§ Sir C. Osborne
But will the hon. Lady not agree that on more than one occasion at that time I defended Sir Stafford Cripps in the House against hon. Members of his own party? [HON. MEMBERS: "No."] I put that on record.
§ Miss Herbison
That may be so—I do not know. I only know that we did not get the hon. Member's support in the Divisions, which is sometimes the most important manifestation of real support for any policy.
I hope that the propaganda Minister, who is now on the Front Bench, will convey to his right hon. Friend the Chancellor of the Exchequer——
§ The Financial Secretary to the Treasury (Mr. Alan Green)
I am not the propaganda Minister.
§ Miss Herbison
Then I hope that the hon. Gentleman will convey to the propaganda Minister—who will, I hope, 509 in turn convey it to the Chancellor of the Exchequer—that neither the Government nor the Chancellor have any right to expect our trade unions in any way to participate in the N.I.C. at present. We had a diatribe from the hon. Member for Louth, and an offensive description of trade union leaders who all along since the war have shown a far greater responsibility than have the big leaders of industry. How the hon. Member expects co-operation after his offensive language and description, I just do not know.
As long as the Chancellor and the Government spokesmen insist on a curtailment of wage increases and, at the same time, do nothing at all to curtail profits, there is very little chance of their getting co-operation from the trade union movement.
As long as 2 per cent. of the population still own over half the wealth of the country it is difficult to obtain co-operation. As long as the workers see others making £1 million overnight by a take-over bid, not a penny of which goes to the Exchequer, so long it will be difficult to get the co-operation which we must have if we are to survive and our standard of living is to be raised. The Chancellor said rather pathetically that the attitude of the T.U.C. towards the National Incomes Commission was not very helpful, but only when it is clearly seen that there is an attempt to secure social justice can we expect the co-operation which is so vital to our wellbeing.
The Chancellor of the Exchequer said that in his excellent speech my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) had not given figures of comparative costs in other countries. My hon. Friend dealt today with those matters which are vital to our economy, but he quoted what has been happening during the last twelve months and I ask the Government spokesman who is to wind up the debate to tell me of a single country in the whole of Europe which kept down the cost of living as it was kept down in this country from 1945 to 1951.
As for the people who are hit by the cost of living, I want to speak mainly of the retired. The only comparison that the hon. Member for Louth could make between those who retired in this 510 country and others was with 270 million people in India. It seems that the hon. Member expects us to depress further the lives of our own old people to help the millions of starving people in India. There are other means of obtaining that help, not from the depressed one-tenth of our people but from those who even today are living in the lap of luxury. However, even if we took that help from them it would make little difference to India. If we want to help African and Asian countries we shall be able to do so only if we have a sound economy and a rapid expansion of our industries.
On my way each day to the Palace of Westminster I see a huge poster which shows a kindly looking old man with a child in his arms. He is saying to the child, "Ssh! don't let Labour know that the Conservatives in 12 years have doubled the pension." In 1950 we on this side of the Committee could have put up a similar poster with a kindly old man and a nice looking child. The old man could have been saying "Ssh! don't let the Conservatives know that Labour has almost trebled the pension in five years." But what good will that do?
I ask myself whether the present pension of £3 7s. 6d. is adequate for an old person to live on and whether the present basic pension of £5 9s. is adequate for an old couple. Every decent person on either side of the Committee must give an emphatic "No" to that question. All this humbug about our old people never having had it better is nonsense. The answer is that well over 1 million old people are in receipt of National Assistance. They are people who, like the hon. Member for Louth, have worked hard all their lives and by their labour have contributed to the well-being of the country. Why on retirement should they go to the National Assistance Board for help, no matter how kindly the Board's staff may be? There are also a quarter of a million old people who just will not go to the Board. There are some of these people in my constituency.
The hon. Member for Louth talked about political bribery. He described as political bribery our wish to get rid of prescription charges. Does the hon. Member know that for years the B.M.A. has been saying to his own Government 511 that that is one charge at least which should be abolished? The doctors have asked for that not because of the cost to the old and the sick; but because they feel that the charge interferes with their treatment of the sick, and that is a very bad thing in what is supposed to be a civilised country.
We should think of the great hardship suffered by the chronic sick and those who are living just above National Assistance level when they have to pay for these prescriptions. I do not regard it as political bribery but as justice to give to the chronic sick and the old the medicines they need, without additional cost, at the time of retirement or sickness.
There is another group in our community whose standard of living deserves our consideration. These are the young married people. Thousands of them, with and without children, have no home of their own. What kind of standard of living is it for a young couple with children to be cooped up in a little room in someone else's house? Despite all that the Government have said about housing, thousands of our young people live in these conditions.
There is also the situation of those young people who make a great effort to buy their own homes. There are a great many of them in my constituency—good, responsible young couples who have a heavy mortgage to pay. They are paying a much heavier mortgage than they should be paying because of the high interest rate imposed upon them as a result of Government policy. They have to budget almost to the last farthing and if anything untoward happens in the home they have "had it". No Government should have placed such burdens on the shoulders of these good responsible young people.
Not only have they to pay high interest rates but the local authority rates which they have to pay are far too high, just as they are for those who live in council houses. Again, these are high because of the Government's specific policy of high interest rates which compels local authorities to pay far too much for the money which they borrow for housing, for building schools, and for the capital investments which they are in duty bound by the Government to carry out. 512 True, these young people have homes, and from that point of view they are better off than those young couples who are living in rooms, but very often the amount that they have to pay for their homes depresses every other aspect of their standard of living.
I want to turn to another point that was mentioned by the Chancellor of the Exchequer. He said that we were undergoing a vigorous rate of expansion, and he attributed much of this to the fiscal measures which he introduced last year. He said that these measures had led to greater efficiency and production. The party opposite is 11 years too late. For years those hon. Members on our Front Bench responsible for economic and industrial matters have been trying to get successive Chancellors in the party opposite to do the very thing which the Chancellor last year suddenly decided to do. Therefore, he can take very little credit for the spurt that we are getting at the moment.
Even this vigorous expansion is patchy. In Scotland, where I come from, we have seen no signs of this vigorous expansion. We still have over 96,000 men and women unemployed. Last night the Prime Minister made a speech in Coventry and it seems to be backed up very much by the hon. Member for Ilford, South (Mr. Cooper).
§ Miss Herbison
That is the trouble. I was just about to say that he has been reclining on the Front Bench opposite, muttering away about nationalisation and all its evils.
The hon. Member seemed to be very much in agreement with the part of the Prime Minister's speech dealing with nationalisation. How wrong it is of hon. Members opposite to take every possible chance to denigrate the nationalised industries. Those industries are being run by public-spirited men. Those people—Lord Robens and all the rest of them—have done what I can only describe as a wonderful job for this country.
Again, I say to the hon. Member for Ilford, South that if the nationalised industries are so bad for this country, a great deal of the blame can be attached to the present Government. If 513 they really believed that nationalisation was bad for the country, they ought to have denationalised those industries years ago. But, of course, they have not, and there is nothing in their policy which suggests that they are going to denationalise them. The Prime Minister, who represents a Scottish seat, seems to know little about the economy of Scotland.
§ Miss Herbison
If he were to go anywhere in Scotland and try scaremongering about nationalisation, he would not have a very warm welcome. In Scotland almost everything that is bright in our economy today is either publicly owned or has been greatly financed by the Chancellor of the Exchequer. Heaven help our country if we had not got these publicly-owned industries and industries like the steel strip mills which have had so much public finance put into them.
I give this warning to the Prime Minister to save him, because sometimes I feel that he is so pathetic and I would not like him to go to Scotland and make the kind of error that he has made so often. I say to him, "Keep off public ownership when trying to get votes in Scotland." It seems to me that the present Government have decided that Scotland is expendable. I think they now realise that in Scotland we have a majority of Labour Members and that it is too late in the day to try to reduce that number. Indeed, I believe they know that the number will be increased.
I am not only concerned with the number of unemployed in Scotland. It is a fact that wherever there is a large number of unemployed the standard of living of those who are employed is depressed. This can be seen quite clearly by comparing wage rates in Scotland or in the north of England with wage rates, for example, in the Midlands or in the South.
This brings me to another point. When our unemployed seek National Assistance they get less from the National Assistance Board than the unemployed get in the Midlands or in the south of England. They come up against the wage stop, because our wages are lower in Scotland. When a man is unemployed, as he so often is under this Government, he suffers yet again. Many 514 people in Scotland have not had a penny of the last two increases in National Assistance—and National Assistance is supposed to provide what the Government regard as a subsistence level. As a result of our heavy unemployment depressing the standard of living, there are many families in Scotland who are living on less than what this miserable Government considers to be a subsistence level.
The hon. Member for Louth seemed to suggest that every trade unionist was working against automation. As an hon. Friend of mine said, the hon. Member for Louth was only able to mention exceptions. They were trifling exceptions compared with the wonderful step forward in automation that has been taken in some areas. Let me refer to the industry which I know best, where my roots are—the mining industry. We have more automation and more up-to-date machines than can be found in any mining industry anywhere else in the world, including the United States of America. That is a nationalised industry.
§ Mr. Proudfoot rose——
§ Miss Herbison
I cannot give way now. One can give other examples to show that automation has been accepted and will continue to be accepted.
Even if the present Government are in office until the very last moment, I am glad to feel that it is not very long before they will go. I know that the retired people, be they basic pensioners or retired on a small fixed income, and the young will be very glad to see the end of this Government——
—and the return of a Labour Government who will carry out the rapid expansion that we desperately need to raise the standard of living which the people have a right to expect.
§ 7.10 p.m.
§ Sir Peter Roberts (Sheffield, Heeley)
Although the hon. Lady the Member for Lanark shire, North (Miss Herbison) was most sincere in what she said, I do not believe that any of the remedies which she put to the Committee 515 would, in fact, bring prices down. All of them, in one way or another, would put prices up. I wish to come back to the gravamen of the charge which the hon. Member for Cardiff, South-East (Mr. Callaghan) made in his opening speech. I congratulate the hon. Gentleman on his speech. I have heard him make a good many, and I am always impressed by the way he manages to put up such a good performance, making bricks without straw. He did it once again today, and he delivered a most amusing speech.
Analysing the hon. Gentleman's speech, one finds that his arguments were of two kinds, the political and the economic. I shall take the political arguments first. It is easy in Opposition—we did it on our side—when one is coming towards an election, to play on the plight of the less fortunate members of the community. This is a political move in which we have all indulged. The answer which my right hon. Friend the Chancellor of the Exchequer gave, that the real value of social benefits has, in fact, increased, is conclusive. I shall not go into the percentages, but I think that we all agree that the value has increased.
On both sides of the Committee, we want to do more for the less fortunate, and I hope that hon. and right hon. Members opposite will accept our sincerity if we accept theirs. Nevertheless, there is no doubt that the Conservative record in this matter is better than the Labour record. [HON. MEMBERS: "No."] It is better. On this part of the political argument, hon. Members opposite must put up a better performance in the debate if they want to justify their Amendment to reduce the salary of the Chancellor of the Exchequer.
The hon. Member for Cardiff, South-East and other hon. Members opposite tried to attach considerable blame to the Government for rising prices. What the hon. Gentleman overlooked was pointed out by my hon. Friend the Member for Louth (Sir C. Osborne), who, I see, is leaving us for a moment. [Laughter.] I do not want to stop my hon. Friend leaving the Chamber. That would be the last thought in my mind. It was just that he made the point so well that I did not wish to elaborate it. If we are to pay an increased price for raw 516 materials and if, as we all want, the under-developed countries are to get the benefit from the rising price of raw materials, we must accept that there will be an effect on prices here. The point my hon. Friend emphasised is that it is no good trying to blame the Government for that part of the increased cost which we have to bear because of increased overseas prices.
Next in his political argument, the hon. Gentleman seemed to suggest that the standard of living had not been improving in real terms. I hope that I am not misquoting him. I had the impression that he and others on the Opposition benches suggested that there is a great deal of dissatisfaction with the general rise in the standard of living. On this point also I was much impressed by the speech of my tight hon. Friend the Chancellor of the Exchequer and the figures which he gave which showed that under this Government the standard of living of our people has, in fact, increased. So far, we have heard no argument from the benches opposite—I think that we ought to hear about it—as to what the Opposition would do, if by some extraordinary chance they came to power, to improve the standard of living to a greater extent than we have. As my right hon. Friend pointed out, we have kept to the target of doubling our standard of living in 25 years. Do the Opposition claim that they will do better? If they do, how would they do it?
The hon. Gentleman's next political point related to land prices and rents. This must be answered from this side of the Committee. In the economic conditions of today, when we have allowed demand and supply to play a part, these prices have, in my view, gone too high. I think that they will come down, but I consider, nevertheless, that they are too high at the moment. Why is this so? The first reason, which hon. Members opposite must appreciate, is that in the past, for one reason or another, we kept the price of land and the level of rents artificially low. When this is done and the restriction is later released, one is bound to get a distortion in the economy.
The Opposition must realise that, if they take the opportunity to recontrol prices, this will only mean that, at some future date, when the particular artificial 517 restrictions come off, there will be another distortion. I am certain that permanent control on an uneconomic basis in that way must in the long run lead to distortion. We are, to some extent, suffering from the release of the restrictions which were placed on land prices and rents over the 13 or 14 years prior to derestriction.
The other factor in this connection is the scarcity of land for building purposes in and around our cities and towns. There is a great scarcity of building land in and around Sheffield, part of which I have the honour to represent. But one must remember that the Government and the Labour Party agreed in imposing the planning restrictions upon development; and both parties must take responsibility for the fact that there are areas of land which could be used for building but which are not being so used. I have had cause to complain recently in Sheffield that some of the white land, as it is called, which was designated way back in 1938, is still being used not as building land even though it is up against the moors and hillsides of Sheffield. Both parties must take some blame for the stultifying effect of sterilising land which we need for building purposes, for open spaces and the rest.
I turn now to the economic side of the matter. I wish particularly to take up what the hon. Member for Cardiff, South-East and same of his hon. Friends have said about the engineering industry. I have a personal interest here because I am vitally concerned in the management of engineering enterprise in various parts of the country. The fact that I have this personal interest does not, I think, detract from the help and advice which I may be able to give to the Committee in this respect.
The unrealistic charge which we have heard from the Opposition today, which has been taken from some paper with which I am not really conversant, is based on the claim that the engineering industry is out to get maximum prices. Wherever this idea came from, I do not know. I gather it is said that the object of the engineering industry is to maximise prices. This is quite untrue. I hope that the hon. Member for Sheffield, Hillsborough (Mr. Darling), if he is to 518 reply to the debate, will take this point up.
In engineering, it is the customer who decides the price.
§ Sir P. Roberts
It is the customer who decides the price. Let the hon. Gentleman try to sell some engineering product and then he will find out. In many cases, of course, the customer is overseas and he has the whole range of world engineering production to draw from.
§ Sir P. Roberts
That is what I am saying. The suggestion I heard today was that management is concerned only to put up prices, and this is what I am trying to show is false.
I am thinking particularly of the heavy end of the engineering industry. Incidentally, the hon. Lady the Member for Lanarkshire, North will know that in the Glasgow and Edinburgh area engineering firms were on short time until two or three months ago. The profitability of the engineering industry has been low. Men have been kept on in firms to maintain employment where, possibly, there have not been the orders to justify it. I could cite many instances when orders from overseas and home have yielded no profit, simply to keep employment and the overheads of the companies going.
Over the last two or three years, the industry has been faced with increasing insurance, rents, rates and raw material costs. Basically, however, there has not been an increase in prices. In the heavy engineering end of the business, of which I am particularly speaking, prices have, if anything, been kept stable or have decreased. At the time of the recent 519 wage award—I am not quarrelling with it—it was essential, unless there was to be massive unemployment, that this extra cost should be passed on, where it could be passed on, to the consumer. There is no cause for blame upon the industry or upon management in this respect.
It is wrong that certain hon. Members opposite should try to force a wedge between management and workpeople. My hon. Friend the Member for Louth tended to do this also. I deplore it. It is in the interests of management and of workpeople that they should work together and understand each other's problems. It is essential for good management to have high wages. Good management wants efficient work, high wages and productivity.
The trade union movement and leaders and responsible management have done a very good job during what has been a difficult time in the last two or three years. I do not associate myself with what my hon. Friend the Member for Louth said. We know that there have been difficulties. We know the difficulties of the unofficial strike and of outside influence. We appreciate the work which the T.U.C. and other trade union leaders are doing behind the scenes to combat their difficult position. I am certain that out of it, and provided there is good will and no attempt is made politically to drive the two sides apart, we shall be able to do what the Government want and increase our standard of living and maintain stable prices.
We have heard talk about nationalisation. The hon. Lady the Member for Lanarkshire, North must realise our difficulty. If the Labour Party dropped its suggestion of nationalising steel, we would not have to attack nationalisation. When we do attack it, we tend to draw certain comparisons with the coal, gas and electricity industries. Economically, this is unfortunate, because I appreciate that the great work that they do is a basic part of our industrial endeavour. Nevertheless, when politics comes into the issue the hon. Lady must not complain if we on this side attack the idea of nationalisation.
I should like it to go on record in this debate that for the last three years, despite rising costs generally, steel prices basically have not risen. I hope that 520 they remain static, although the pressure of rising costs is making things difficult.
Therefore, the attack which we have heard upon the engineering industry by the hon. Member for Cardiff, South-East and others is wrong. It may be that they are confusing the lighter end of the engineering industry, the end which is nearest to the public. If they are drawing examples from the refrigeration or electrical sectors of the industry, I hope they will realise that there is a great difference compared with the heavy end of the industry, where competition is fierce and where the Americans, the Japanese, the French and the Germans cannot make us maximise our prices. We have to compete with world prices.
It was said by one hon. Member that Great Britain was the third greatest engineering country in 1946. Was he suggesting that any engineering country has surpassed us since then? Is there anybody in the party opposite who would denigrate British industry and say that the Germans or the French are better than we are? I am sorry that the hon. Member has left his place, because I wanted to question him about this. I hope that there is no suggestion in this Committee or elsewhere that we have lost our industrial position in the world. I agree that in magnitude we come below the United States of America and Russia. Beneath them, however, we are at the head both economically in quality and in industry above any other country.
It is said by the Opposition that the Government have not taken steps to control rising prices. Let us go back to 1961, when my right hon. and learned Friend who is now Leader of the House put upon the economy what has come to be called the pay pause. This was unpopular and was attacked both from the benches opposite and by people outside. Nevertheless, it was an example of the Government taking action which had the definite effect of keeping down prices.
§ Sir P. Roberts
I do not like the expression "sacked". The hon. Member should not use it in this Committee.
§ Sir P. Roberts
Everybody knows that.
In 1961, action was taken by my right hon. and learned Friend which had a definite effect in controlling prices for nearly three years afterwards. This is something which has not been mentioned by any right hon. or hon. Member opposite, but it is a definite example of the bold action which the Government have taken. It may be that the pay pause was kept on too long—I am not arguing that—but it is an example of how the Government have taken action to keep prices down, and it is something which the country will remember. I hope that when we look back over the last years, the actions of the Government will be seen as being calculated best to increase our standard of living and to keep prices as low as possible. I hope that they will be given—and I am sure that they will—an opportunity to continue to do so.
§ 7.30 p.m.
§ Mr. Arthur Lewis (West Ham, North)
I am pleased to follow the hon. Member for Sheffield, Heeley (Sir P. Roberts). One would think, listening to him, that 1961, when the present Leader of the House was Chancellor of the Exchequer, was the first time that the Tory Government appreciated that the cost of living was going up.
The hon. Gentleman seems to forget that at every election from 1951 onwards—and before that—the Tory Party promised that it would reduce the cost of living, make the pound worth something, would not abolish subsidies and would not introduce rent decontrol. What happened? For 12 years not only have prices risen but they have gone up by the deliberate policy of the Government, now being continued by the present Chancellor of the Exchequer who, almost throughout the 12 years, has been in the Treasury.
It is true, as the hon. Member for Louth (Sir C. Osborne) said, that import prices have great effect upon our cost of living and the prices of our finished goods. But what he conveniently forgot to mention was that during these 12 years, with the exception of the last few 522 months, import prices have been dropping and that the terms of the balance of payments have been in favour of the Government. The hon. Gentleman referred to what happened in 1945–51 but forgot also to mention that during that period world prices went against us.
The Chancellor of the Exchequer also mentioned the rise in the cost of living in 1951. He, too, forgot to mention that import prices rose that year, in some instances as much as 700 or 800 per cent., because of stockpiling in the Korean War. I shudder to think what would have happened in this country if during the last 12 years import prices had risen by such amounts.
Looking back, one can see how every action of the Government in fiscal policy has deliberately been intended and has had the effect of increasing the cost of living and giving to those who have the most at the expense of those who have the least. One sees the picture emerging from the Budgets presented during those years.
The biggest reliefs in taxation have been given to Surtax payers. It is true that some of the lower income groups had budgetary relief before the 1955 Election but immediately afterwards the present Foreign Secretary, then Chancellor of the Exchequer, increased Purchase Tax. It is now higher than it has ever been—65 per cent. above what it was in 1951. The Government have also increased the National Insurance contributions, which also makes the lower income groups worse off.
§ Captain W. Elliot
Is the hon. Gentleman able to give the actual Purchase Tax figures for 1951 and for today?
§ Mr. Lewis
My information is based on a Question I asked the Chancellor of the Exchequer and the hon. and gallant Gentleman will find the answer in HANSARD of 19th February. Taking 1951 as the base line of 100, we find that there has been a 65 per cent. increase, according to the latest figures available, those for 1963.
§ Captain Elliot
If the hon. Gentleman is arguing on the increase in the yield of the tax, he can apply the same argument to Income Tax and to any other sort of tax. The reason for the increase is that the national income has gone up so enormously under the Conservative Government.
§ Mr. Lewis
I have accepted the fact that this is the increased yield. But the fact remains that this came from increased prices and higher taxation and that, when the present Foreign Secretary was Chancellor of the Exchequer, he extended Purchase Tax to a number of goods—day-to-day commodities such as brooms, buckets and other household necessities. These are still subject to Purchase Tax. Certainly there is a bigger yield. That is because more things are being taxed. More of the housewives' necessities are being taxed today than they were in 1951.
§ Captain Elliot rose——
§ Mr. Lewis
The hon. and gallant Gentleman can jump up as much as he likes, but I want to speak about just after the last General Election, when the present Leader of the House imposed the most pernicious of all taxes—the sweets tax on the poor children. We were told that it would last only for the period of the pay pause. The right hon. and learned Gentleman said that it was purely temporary. Nevertheless, the Government are still taxing children's sweets and ice-cream, but, of course, are still giving reliefs to Surtax payers.
We hear appeals to the wage earners and the trade unionists not to go for wage increases. How do we deal with cases which every hon. Member repre- 524 senting an industrial seat, particularly in working-class areas, hears about every day, where people are having their rents increased by 10s., 15s. or £1 a week or more under creeping decontrol?
The hon. Member for Louth has now left the Chamber, but I would ask him what he would do in a case like the one I shall now cite. It is that of a young bus driver with two small children. The family lives in a house which was occupied by his parents and his grandparents over a period of 85 years. The house cost only about £100 when originally built. The family have regularly paid the rent. The successive generations have kept it in repair and have decorated it—all at their own expense and never asking the landlord to pay a penny. About five or six years ago the father died and the mother took the house over. A year ago she, too, died. Now the landlord says that the rent, which is now 25s. a week, will go up to £5 10s. a week and that if the bus driver cannot pay he must get out. What is he to do? He can get out, but to what? The council house list?
While hon. Members opposite have been in power, their deliberate fiscal policy has resulted in a 35 per cent. drop in the production of council houses compared with 1951. It is no good talking about a housing target of 400,000 or 300,000 a year when deliberate fiscal policy results in reducing the number of houses for those in most urgent need. I could give chapter and verse of the taxes and other legislative measures which have deliberately shoved up the cost of living.
Hon. Members opposite supported the Government in legislation which resulted in rate increases, but when there came a scream from some of the retired ladies in Bournemouth, Boscombe and Bath—and they were right to scream—at the doubling and trebling of their rates, the Government gave way to pressure from their own hon. Members and decided to give these areas amelioration of rates. But the not so fortunate areas, such as mine, where the same situation applied, did not get any amelioration, so that working-class families—for instance, the bus driver of my example—now find that their rents have risen from £1 5s. to £5 10s. a week, while their rates have doubled, 525 or risen by as much as two and a half times. Is that bus driver to say that he will not pay his rent and rates?
It has been argued by some that people in this position should buy their own house on mortgage from a building society. How can they do that? It has been said that the average wage is about £12 a week and that one-fifth of the working population gets that average. How can someone in that position get a house in London when we know that the cheapest house costs anything between £2,000 and £3,000 and when they have to find £200 or £300 in deposit, quite apart from legal costs and so on?
These families do not have two half-pennies for a penny, not enough money to furnish their homes, let alone find £200 or £300 for a deposit. But even if they can, if they borrow, as some do, from their parents or other sources, if they pinch and scrape to get the deposit, when they sign the contract and think that they will have to pay £1 or £2 or £3 a week, overnight the Chancellor puts up the Bank Rate and these people have the choice of paying an extra 4s. or 5s. a week, or of having the period of the mortgage extended by two, three or four years.
It is no good hon. Members opposite shedding crocodile tears and the Prime Minister talking about what he intends to do to reduce the cost of living—he said something about "Neddy, steady, go". He ought to look at the facts, and the facts are that Government actions have been responsible for the situation. All he has to do is to reverse Government policy over the past few years. I suggest one immediate action which he could take and which would reduce the cost of living tomorrow—reintroduce rent control and bring in legislation to stop creeping decontrol.
When the people come to decide these issues—as they will in May or June or October—they will do so not on the pledges and promises of the Prime Minister and the Tory Party, but on the fact that right hon. Gentlemen opposite have had 12 years of power. The people will ask, "Why did you not do these things during the last 12 years? If you are now telling us that you can do this, that and the other, why have 526 you not done it already? If you are saying that you will reduce the cost of living, why did you not do so over the last 12 years?".
I agree that the main issue on which the electorate will decide the election is the cost of living, and on that the country will say that the sooner we have a Labour Government at Westminster, the better it will be for the people.
§ 7.45 p.m.
§ Mr. A. E. Cooper (Ilford, South)
We have just listened to a fair old lot of rubbish during the last 10 or 15 minutes. It may sound very well on a street corner on the eve of poll at the General Election, but it does not bear analysis on the Floor of the House of Commons. I recommend the hon. Member for West Ham, North (Mr. A. Lewis) to journey to Oxford at weekends with his hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) so that he can polish up on his sums, when he will find that life is not as he imagines it to be.
Only one point in the hon. Gentleman's speech needs to be bothered about. This is his reference to the concession to Surtax payers. The right hon. Gentleman the Leader of the Opposition has been complaining over the last few weeks that we are not paying sufficient money to scientists and professors and the like, so that they are going to America and other countries. These are the very men who have benefited from the Surtax concessions given by a Conservative Government. That should not be forgotten. All of them in receipt of more than £2,000 a year—and that covers all the professors and scientists who have left this country in the last few years—have benefited. Will the hon. Gentleman and his right hon. Friend say that it was wrong to encourage these scientists? The hon. Gentleman cannot ride two horses at the same time.
§ Mr. Charles Curran (Uxbridge)
Would not my hon. Friend agree that the Surtax cut also helped us to get back into teaching married woman whose husbands had incomes near the Surtax level and who had been restrained from returning to teaching because their joint income would have been above the Surtax scale?
§ Mr. Cooper
That is a fact which is not generally recognised. The combined incomes of men and women school teachers at present salaries took them above the Surtax level and they benefited directly as a result of those concessions. Let us rid our minds of this prejudice of class and class. The hon. Member himself does not do too badly in industry and has benefited considerably from these concessions.
§ Mr. A. Lewis
On a point of order. Is it in order for an hon. Member to make a statement concerning another hon. Member's private activities when he does not know whether it is true? As a matter of fact, it is not true, so I ask him to withdraw. It is not true in any way, shape or form.
§ The Deputy-Chairman
Order. We cannot have the word "lie" bandied about in the Committee. The hon. Member for West Ham, North (Mr. A. Lewis) is perfectly entitled to ask the hon. Member for Ilford, South (Mr. Cooper) to withdraw if he wishes, but if the hon. Member for Ilford, South does not withdraw, then that is not a matter for the Chair.
§ Mr. Lewis
I apologise, Sir Robert, and withdraw the word "lie". It is a terminological inexactitude for the hon. Member to say that I have made any money in business, or done anything on business, when it is not true. I therefore ask him, if he is an honourable man, to withdraw, because it is not true.
§ Mr. Cooper
If the hon. Gentleman is saying that he has failed in business over the last 12 years, I am sorry for him, and I withdraw any previous imputations of success.
§ Mr. Gordon Walker (Smethwick)
Whether my hon. Friend the Member 528 for West Ham, North (Mr. A. Lewis) has failed or done well does not matter. The hon. Member for Ilford, South (Mr. Cooper) is making these charges. He should say whether he has done well or failed. We are equally entitled to hear that.
§ Mr. Cooper
My Division record bears comparison with that of the hon. Gentleman. I must admit that I do not speak as often as he does, but, then, Scottish Members speak so much that English Members get very little opportunity to do so.
I am sorry that the hon. Lady the Member for Lanarkshire, North (Miss Herbison) is not in the Chamber. We all very much admire her, and she has been a good friend to many of us over the years, but there are certain things that I must point out. This is not merely a question of rapidly expanding our economy. That is not difficult to do. The Chancellor of the Exchequer always has at his disposal ways and means by which our economy can be expanded beyond any reasonable bounds, but which, in the end, although we may produce various things, could make us bankrupt.
The essential element is the ability to sell our goods overseas, and hon. Gentlemen opposite know that. I do not have to teach them their A.B.C. of economics. From time to time we are unable to export because, first, our prices are too high, and, secondly, because other countries are in financial difficulties themselves and cannot buy our goods. A classic case at the moment is India. She needs large quantities of goods from us and from other countries, but she just has not the necessary currency to buy those goods. It is, therefore, no use us producing all sorts of goods to cure unemployment in one area if we are never to be able to sell them to the countries to which we are supposed to sell them.
We must rid ourselves of the idea that all that we have to do in this country is to stoke up the economy and all will be well. Unless increased productivity is accompanied by this essential element 529 of being able to export a proper proportion of that increase in production, we can never succeed in keeping inflation at bay in this country. That is the A.B.C. and, indeed, the whole alphabet, of the economics of this country.
I deal next with interest rates, about which we have heard so much tonight. We have heard about the way in which the raising of interest rates by the Government affects young people wanting to buy a house, how it affects the costs of local authorities, and so on. That is true, but what does the Labour Party propose? Does it propose to have one set of interest rates for its international trade, and another set of rates to cover the internal domestic economy? If it does, it should say so. If hon. Gentlemen opposite propose to do that, they must tell us how they will find the difference between the lower and the higher rate of interest.
We do not have a high Bank Rate in this country simply because we like it that way. We have a relatively high rate because it has to bear some relationship not only to our own trading position, but also to the position of overseas countries. Our rates were out of line with those of other countries, and, in consequence, it was no longer profitable for money to be kept here and was drawn away. These things have to be kept in some sort of balance with the position in other countries.
I repeat my question: does the Labour Party propose to have a lower rate of interest charges to cover the internal position? If so, what is it to be? What will it cost, and how will the money be found? It is no use dangling this lovely carrot of lower interest charges before local authorities and young people. They must be told how it will be done and what it will cost. That is where the Labour Party has been dishonest and hypocritical over the past few months. Hon. Gentlemen opposite have thrown out all these fine aspirations, with never a word about the cost, or how the money will be found.
The hon. Member for Lanarkshire, North said that she would do away with Health Service prescription charges. That would cost £200 million. Where will that money come from? It will have to be found from somewhere, and 530 never once has the party opposite suggested how that will be paid for.
A lot of criticism has been levelled against the Conservative Government tonight, but I remind hon. Gentlemen who are now going to the country, or will do so during the next few months, with all sorts of fine plans and aspirations, that they were the Government for six years when we had the full paraphernalia of Socialist planning. We were offered all the things that we have been offered again now, and as a result of having a Labour Government we as a nation received a loan of £1,000 million from America, and £350 million a year by way of Marshall Aid. We do not receive anything now. We live on the industry of our country without any soup kitchen subventions from any other country, and hon. Gentlemen opposite should bear those solid facts in mind.
When hon. Gentlemen opposite talk, as they have done tonight, about controlling profits and dividends, I would remind them that about 50 per cent. of all the profits in industry come back to the Exchequer in the form of taxes and help to support the Welfare State. If profits were reduced exceptionally by a constitutional act, or by a legislative act, the amount of money received by the Exchequer would be reduced. How would the party opposite make up for that loss? What new taxes would they impose to make up for that loss of revenue?
We have had a lot of electioneering tonight, and I have been guilty of it myself, but we have to get down to fundamentals if we are to live through the next 10, 15 or 20 years without everything getting out of hand. For example, both sides of the Committee accept the need to increase the number of schools the number of teachers, the number of universities, training colleges, houses, hospitals and roads. All that will cost a great deal of money. So far, the money is being found by two methods—taxes and rates.
The problem with which we have to deal—and I confess that I am not able to give a ready answer to this—is how to spread the rate burden more equitably than it is spread at present, because the rate burden is one of the principal costs which the ordinary working man, as it 531 were, forces down the throat of his shop steward and ultimately brings about a demand for higher wages. The regular increase in rates is an extremely heavy burden for old-age pensioners and people living on small fixed incomes, and, if I may point this out to the hon. Lady the Member for Lanarkshire, North, it is one reason why there has been an increase in the number of people receiving National Assistance. This rate burden, which is only a poll tax, was designed many years ago, in quite different social circumstances, when nothing like so much work was being done as is being done today, and we must get down to trying to revise the system.
The hon. Member for Lewisham, North referred to house rents. I have no doubt that a flat rent for a council house is wrong, and that the differential rent scheme which is being adopted by many councils, including some Labour ones, is the right and just way of charging for accommodation.
It is absolutely right that a man should pay a proper proportion of his income for his accommodation and that he should not expect to be subsidised by someone who is probably in a much worse financial position. This aggravates the cost of living for the people who have to pay the subsidies in some form or another. It is a very serious matter.
We have also talked about transport. It seems to me that in this debate we can talk about every conceivable thing under the sun, so long as we mention the cost of living every couple of minutes. We have been talking about nationalised industries, transport, and all the rest. I ask hon. Members opposite, who have such a great love for nationalisation: why do they suppose that we in industry spend hard-earned capital on buying lorries, and on drivers and maintenance plants to keep them going, if we have an efficient nationalised transport system?
We do not spend all this money, depending on the size of the organisation, in many cases thousands upon thousands of pounds, for nothing. We could much more happily use that money to buy plant and machinery and thus benefit the consumer. We have to do this because 532 the nationalised transport system is incompetent, and we cannot do anything about it.
We have been trying for 12 years to reorganise the nationalised transport system, and, slowly, some sense is being brought to it, but with no help from the Opposition. As soon as Dr. Beeching introduced his Report, where did the opposition come from? From the Labour Party, as all opposition does whenever the word "progress" is mentioned. I have never known a party so stuffed with Luddites as is Her Majesty's Opposition at this time.
I turn to profits and dividends. It would be a very clever man on the other side of the House who could tell any of us in industry at the beginning of a financial year what our profit margins would be at the end of the year. We should like to know. The fact is that we never do know. All sorts of circumstances arise during a working year which can throw out of balance our best calculations. That brings me back to this one point: even if it were possible, which it is not, so to determine our profits, the Exchequer would suffer because 50 per cent. of the profits of industry goes back to the Exchequer.
There is one thing about which I think something could be done. I do not know whether Parliament itself would be able to do this, or whether there should be a Royal Commission or a Select Committee to consider it. But there is no doubt that with the way in which our life has developed over the last few years, with the very heavy demands being made by ordinary people upon manufacturing industry and our farms, our distribution system is, to put it mildly, a little archaic. The idea of still bringing, as still happens, lots of goods from the West Country to London and sending them back and sending manufactured goods from London to Manchester and back again, is something which, in our day and age, we cannot tolerate. We must bring our distribution system more up-to-date. This, I am sure, would have a very salutary effect upon our costs.
The next very important thing is to ensure there must be no delay—and I am sure that Her Majesty's Government will not delay—in carrying through what is now commonly called the Kennedy 533 Round of tariff revisions. It is very important for British industry, and for the expanding world economy, that the Kennedy Round is brought into effect as quickly as possible. Let us not delude ourselves. When these are brought into effect, some industries will be hurt; but that is what we must expect if we are to live in this modern world and earn an honest and prosperous living.
What must happen? The only way in which these vast new expenditures, which we are all agreed upon—there is no difference of opinion between us—can be financed is by a real increase in productivity in this country, not just productivity for its own sake, but a real productivity, based on solid costs, sound achievement, good quality, and with a good export potential. Then we can have all the things that we need to produce what we want. There is a part for all sections of industry to play in this. An incomes policy is essential.
I am sorry, as I have no doubt hon. Members opposite are, that N.E.D.C. has so far failed to reach a satisfactory conclusion on this point. But it will have to reach a conclusion, whether under a Conservative or a Labour Government. The facts are that N.E.D.C. must reach a conclusion on an incomes policy, and this policy, when agreed, must have the full support of all the individual unions making up the T.U.C. This is important. Whenever we mention trade unions the hackles of hon. Members opposite rise and they think that we have really "got it in" for the unions. It is not so at all. The T.U.C., as hon. Members opposite know, has no control over constituent unions, and the unions have no control over individual members. There must be this control, because the T.U.C. members on N.E.D.C. cannot possibly agree to an incomes policy if the T.U.C. is not able to enforce it with its own members.
§ Mr. Darling
Would the hon. Gentleman say that the Federation of British Industries should have industrial control over all the firms in the country?
§ Mr. Cooper
That is not an easy one for the simple reason that membership of the F.B.I. is quite different from membership of a trade union.
In the first place, it is based on the capital of companies which are very 534 divergent, with extremely different profitability, and so forth, but if N.E.D.C., on which management is represented, came to a satisfactory conclusion which it could be seen would be accepted by the T.U.C. I have no reason to suppose that the management would not accept it, also. I am quite sure that that would be so.
The fact is that we have a sizeable job on our hands at present. An exploding population over the next 10 years will bring with it immense new problems which we have to face. Although it is enjoyable to stand here or in a public hall and have a bit of a knockabout and "pull each other's legs", the fact is that his is Parliament, where we are supposed to deliberate seriously the nation's problems and try to offer suggestions to Her Majesty's Government which, we hope, are considered in the fullness of time in the various Departments.
It does not do us any good to try to score party points over each other, although I do it myself. It does not do us any good here, and it certainly does not do us any good in the eyes of the country, to conduct ourselves in this way. The debate that we have had today on this very vital subject is about as serious a debate as we can have in this Parliament.
§ 8.10 p.m.
§ Mr. William Hamilton (Fife, West)
The hon. Member for Ilford, South (Mr. Cooper) has placed before the Committee one or two of the serious problems that we have to face. In the first minute or two he rightly said that above all else we must increase our export potentiality, and in the latter part of his speech he said that we must have an incomes policy. The two points are related. The middle part of his speech was a knockabout turn—to which he was entitled. As the Prime Minister said, our speeches and actions from now on must have an election bias—and the Prime Minister is leading the way in this regard.
I was interested in the hon. Member's further point, which is also true, that if we do not increase our export potentiality we shall never solve the problem of stabilising the cost of living. But I would remind him that this is not what his party said in its election manifesto 535 in 1959, to which he presumably subscribed. That document said:We have now stabilised the cost of living, while maintaining full employmentThis was the cry of his party in the 1959 election, but it has done neither. We have neither stability in the cost of living nor full employment. In fact, we have the worst of both worlds. I could quote facts and figures to substantiate that.
Why have we not achieved that objective? Neither party has achieved stability in the cost of living. It is very easy, but pretty pointless, to contrast the record of the Labour Government, in quite different circumstances, with that of the Tory Party. This gets us nowhere. We might convert some political illiterates—and on this question I think that the Prime Minister is one. I have here a transcript of his interview in the programme "This Week," from which my hon. Friend the Member for Cardiff, South East (Mr. Callaghan) has already quoted. He was interviewed on 20th February by William Rees-Mogg, Bryan Magee and George ffitch—two interviewers of Tory inclination and one of Labour inclination.
They were asking him questions related to the cost of living and our current economic difficulties. They referred to interest charges to local authorities, which vitally influence rents, and land prices. I want to quote verbatim, otherwise hon. Members may think that I am telling lies. What the Prime Minister said verges on political and economic illiteracy—and, indeed, grammatical illiteracy.
When he was asked about the present economic situation, he said:Well, I've no doubt that the Chancellor of the Exchequer will be considering this. If we thought that our prices were becoming uncompetitive, this has been always I think the danger, I've always felt that for instance that if we could exercise a reasonable wage restraint, that there's no reason why our exports shouldn't go on rising. I think in the last two years in particular we've had the edge for instance on our Continental competitors, and that's been very valuable. And the only thing that really can threaten I think our export performance is if wages go up too fast. So I hope that in Neddy and in other places we shall be able to convince the trade unions that there should be a reasonable advance in wages and not an excessive one.536 In the space of half a minute, in giving that answer, he mentioned wages three times. He referred to wage restraint, the responsibility of the unions and the necessity to avoid excessive wages increases.
The hon. Member for Ilford, South, went out of his way to say that, although we must have an incomes policy, we could not forecast and control profit margins, and therefore presumably could not influence them in any way. But profits are incomes to some people. The hon. Member for Louth (Sir C. Osborne) referred on many occasions to the control of wages, but he never suggested any control on profits, still less on dividends and Rachman rents.
This is the climate in which we are discussing a national incomes policy. The overall climate in this respect is one that we must create, and it can be created only by Government action. Until it is created we cannot persuade the unions to accept a measure of limitation to their demands. It is impossible to talk about an incomes policy in the context of controls. I do not believe that in a free society such as ours we shall ever get anybody voluntarily to agree to a control on the demands for increased incomes which are constantly made by shareholders, wage earners, salary earners and the rest. All that the Government can do is to create a social climate in which every section of the community feels that it is being treated fairly and justly, and is getting a fair share of the national income. Then, and only then, will we get people to accept a measure of restraint.
Our argument—and it is a legitimate one—is that if we ask any of the rank and file workers of this country if they think that the economic and social policies which the Government have been pursuing over the last 12 years have fulfilled the necessary conditions, namely, the creation of social justice and equity, the answer is a resounding "No".
I want to deal with some of the Prime Minister's other answers in his television interview. He referred to wages, but never at any point to dividends, profits and rents. Despite the denial of the hon. Member for Ilford, South and other hon. Members about their attitude of hostility to the trade unions, there is no doubt that one of the tactics of the 537 Conservative Party from now to the election will be to pin upon the workers the blame for the economic crisis that the Government have created.
It is not coincidental that the Motion on the Order Paper asking for an inquiry into trade union law and practice appears a few months before the election. It is not coincidental that we have had speeches from the Chancellor—he said the same thing today—suggesting that the wage-cost element is of vital importance to our export trade. Nobody denies that, but if we compare the wage-cost elements of our competitors overseas with our own we find that ours is rather less than most others.
We have had other evidence which suggests that the Government have been seeking to incite workers to strike action. The Postmaster-General went out of his way to deny to Post Office workers what most people regarded as a reasonable wage demand for one of the most dedicated and underpaid sections of our community. The Postmaster-General said, "If you strike, your pension rights will be threatened." What a stupid man! But this is all part of the tactics of the party opposite to build up the feelings of the public against these men, who are doing a really worth-while job.
The Prime Minister has made the same kind of approach to the problem. He asked why my right hon. Friend the Leader of the Opposition did not appeal to the trade unions for restraint. It is interesting that he should make that suggestion. Why does not he himself appeal? He became a trade unionist recently. Recently, the right hon. Gentleman joined the National Farmers' Union. Why does not he appeal to it? It is because he cannot, because his Government is tainted. An hon. Member opposite suggested that the courage of the present Leader of the House in imposing a wage restraint policy when he was Chancellor of the Exchequer was the reason for success, but that was wrong. It was the reason for the failure of the Government to get a response from the trade unions.
Which sections of the community were hit by the pay pause? There were the nurses, who would not strike. So the Government said to them, "No, you are not going to get your 6d. a day"—or whatever the miserable sum was. There 538 were the probation officers, worthy members of the community who would not strike. There were the Health Service workers, they would not strike. The Government did not tackle any of the big boys. There were the teachers; they were too respectable to strike—and I belong to them. These are the people that the Government tackled at that time. That is why they are crying for pie in the sky, for the support and co-operation of the trade unions in that context.
There is no suggestion in the pay policy that Mr. Rachman should restrict his demand to 3½ per cent. per year. There is no suggestion that rent increases should be restricted to 3½ per cent. per year. We take the view that if there is to be an incomes policy it should relate to all incomes, or none. Mention of Rachman and the land racketeers leads me again to the remarks of the Prime Minister when he was quizzed in the programme "This Week". There was no mention of restriction there, by heaven. My hon. Friend the Member for Cardiff, South-East quoted some land price figures.
I have here an enormous number of such figures and I propose to quote some of them. There is the case of a piece of land at Luton which was referred to in The Times of 5th July, 1960.An investment company has paid £250,000 for a site of just over half an acre now used as a car park in the centre of Luton. The price paid is believed to be the highest price an acre recorded in Britain".Then again [...]n Reading,A maisonette site of one and a half acres at Reading has changed hands at £37,000 by auction.That is quoted in the Builder of 5th May, 1961.At Wilmslow, a favourite (Manchester) dormitory area, for middle and upper income group families, 20 acres of farmland, valued at £100 an acre five years ago, recently fetched £3,000 an acre—30 times as much.That was quoted in the Daily Mail of 20th June, 1961.
There are literally scores of these figures which I could quote. When discussing this in that wonderful broadcast, the Prime Minister, the "matchstick economist"—and by heaven, he is all that—talked about confiscation of land, and said that land nationalisation was confiscation. The right hon. Gentleman 539 should know all about the confiscation of land; he has lived on it. Where do the Government think that the Prime Minister got his land? Did he pay compensation for his land? He stole it. His family stole it. And when they talk to us about the confiscation of land, and nationalisation meaning confiscation, I would say that never at any time did a Labour Government nationalise without paying compensation. One of the chief beneficiaries from the nationalisation of the coal industry was the Prime Minister's family. He and his family have lived on the backs of the workers in the coal mining industry all their lives. And they got far too much compensation at the time when the coal mines were nationalised. Let us hear no more nonsense about that.
Obviously, the Prime Minister had not been told what his own colleagues had been saying. In that broadcast he said that we either nationalise, which meant confiscation, or allow the market forces to work. But he could not have read what his own Minister of Housing and Local Government had said on 18th November in the House:What troubles people most is the profit that individuals are making—in some cases big money—out of land transactions. This is because land, which is so necessary, is scarce and because it is made scarcer by planning control.He went on to say:It does seem right that that increase should be collected by the public.He added:It is a corollary of regional development that land planned for major development should be bought well in advance by a public authority for disposal to private enterprise or to public enterprise as required, both to control and phase the development and to help in meeting the cost of bringing it into development. We may well have to devise new machinery for the purpose."—[OFFICIAL REPORT, 18th November, 1963; Vol. 684, c. 654–56.]I wish to ask the Minister whether that new machinery has been devised. When are we to get the Government's public ownership of land to deal with these betterment costs which must and should approve to the public instead of to private landlords? These are points which we are seeking to put into a national context. We shall never get a national incomes policy unless and until we tackle all these facets of the problem.
540 When the hon. Member for Ilford, South and several others, including the Chancellor of the Exchequer, ask how we are to solve this problem and other problems and where we are to get the money for our schemes, I would answer frankly that no hon. Member on this side of the House is under any illusion about the difficulties involved in getting a national incomes policy. All that we say, in general terms, is that we still seek to create the social atmosphere of which I spoke earlier. That will convince the vast majority of the workers that they have a Government who are interested in them and not in the land racketeers, the Rachmans and the rest.
National Health Service charges have been mentioned, I think rightly, in this context. The hon. Member was about 300 per cent. out in his estimate of this figure. I think the figure for National Health Service charges is about £50 million. He said that this would mean increased taxation, but that is a lot of rubbish. It would mean nothing of the kind. The £50 million is taxation now. It is coming from old-age pensioners and the chronic sick. We say that that £50 million burden on the chronic sick and the old will be transferred to sounder shoulders which are better able to bear it. It will mean a transfer of a burden rather than an increased burden. Is that fairly clear to the hon. Member, or has he to get his matchsticks out?
The same applies to the pensions scheme. Someone asked, from where should we get all the money for the national superannuation scheme? The answer is laid out in considerable detail in our policy programme. We said frankly and openly that some workers in the upper income brackets will have to pay more in increased contributions and those with lesser incomes, below the average, will pay less than they currently pay. For them a surplus will be built up which will be invested by the trustees of the scheme, thereby ensuring that the workers of the country get a share of the increased productivity which we hope will come from industry and the national plan which we shall put into being.
It comes ill from the party opposite to ask us where we are to get the money from in view of all the promises we have 541 had in the last six months. The Robbins Committee proposals are to cost £3,500 million over the next 10 years and the Government accepted that within 24 hours of the Report coming out. I do not think the Prime Minister had even opened its cover in Kinross before he accepted it. Hon. Members opposite should not come that lark of saying, where is the money to come from? If we had had an increase of 4 per cent. per year in the national product over the last 12 years we could have done a lot more than has been done. That is the fault of the Government.
On the question of the cost of living, no party can say with its hand on its heart that it has a solution. No party can claim a better record than the other because conditions in which we were working were completely different. Anyone who faces the problem honestly knows that that is so. We claim, and passionately believe, that we can produce social policies, economic policies which will expand the economy at a much steadier and faster rate than the Government have done in the last 12 years. Having expanded it, we believe we can distribute the products in a much more equitable way than the Government have done in the last 12 years. In that context we believe we can get the organised workers to play their part with us, which they will certainly not do with the right hon. Gentleman and his colleagues. We are to have a General Election soon; I wish that it would come tomorrow.
§ 8.32 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I suppose it was to be expected with the General Election only a short time ahead that the Chancellor of the Exchequer would give us a party political knockabout turn in response to the critical analysis of cost of living problems made by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). I suppose it was too much to expect even from the Chancellor a sober, objective examination of the difficult problem of costs and prices.
The Chancellor told us that he was fighting a battle against rising prices, but he told us very little more. Yet I feel sure that if we could emerge from this pre-election atmosphere—which I think impossible—we would agree that the 542 question of ever-rising prices is one of the most crucial and difficult problems facing any Government. I am sorry that the Chancellor is not here now because I wanted to take up a point he injected into the debate—his tendentious statement that savings will fall under a Labour Government. I thought that unworthy of him. I want to know whether that is the start of a new Post Office Savings scare ready for the election. If that is the level of political argument to which the right hon. Gentleman will stoop, we should tell the public right away what we have to deal with.
The right hon. Gentleman may think that he served his party well with a thoroughly partisan speech, but very few people outside this Committee will feel convinced that he served the nation's interests. He compared conditions today with what they were in 1951, in the early post-war years—without, of course, admitting the difficulties of that time, the contining shortages of goods, the sellers' market in which price increases were very difficult to control, the tremendous job of unwinding the war machine and creating a new industrial set-up to serve peaceful purposes after the war. People will remember those difficulties. I think they will also remember, as the right hon. Gentleman chose to forget, that the Labour Government had to contend with a second war which, as he knows, sent prices of raw materials rocketing throughout the world.
I mention this point because those who were here then remember the very brave and heartening words with which the right hon. Member or Woodford (Sir W. Churchill) gave whole-hearted backing to the Labour Government's decision to support the United Nations' military operations in Korea. But we also remember, with a great deal less satisfaction, how the spirit of patriotism in the Conservative Party quickly evaporated when they saw the opportunity to turn the Labour Government's difficulties to their own party advantage. The right hon. Gentleman is asking for our help in his difficult circumstances. Is he entitled, on this record, to ask for it? It was precisely at the time of Korea, in the Labour Government's most difficult circumstances, that the posters went up appealing to the people to "Stop the hole in the purse". The 543 right hon. Gentleman's memory may be conveniently short, but I do not think that ordinary, fair-minded people outside the House will easily forget those circumstances. But they will remember this Government's record in years of peace.
I think that the most revealing aspect of the right hon. Gentleman's speech was that he found it possible to make comparisons between 1951 and 1964—between the situation six years after the end of the war and the situation 18 or 19 years after the hostilities ceased. This is an admission that, although there has been some progress in these years, there has been so little progress in the piping years of peace, in industrial expansion, in trade development, in the modernisation of industry and in our social system that he can easily compare today's conditions with the conditions which the nation had to face six years after the end of the war. In fact, the conditions of the people today should be well beyond comparison. Our living standards should by now be immeasurably better than they were 12 or 13 years ago—and I repeat, "immeasurably better".
The truth is that for millions of our people there has been little or no improvement since those early post-war years. They are still badly housed, their incomes are low, and they cannot share in what should have been a steadily expanding economy, as my hon. Friend the Member for Greenwich (Mr. Marsh) clearly explained. And the Government's failure to keep prices down so that the people with the lowest incomes could reach a more satisfactory standard of life is only one part of their general failure—the one which we are discussing today. We shall have ample opportunity to discuss the other parts of the failure when we come to the General Election—that is, when the Prime Minister plucks up courage to dissolve this Parliament, which has already sat too long.
I do not want to go back in time over the whole field of the Government's record. I want to draw attention to what has been happening in the past two years under the right hon. Gentleman's Administration and also to look at the sharp rise in prices over the last few months—a rise in prices which is still continuing. I agree with the Chancellor 544 that retail prices have gone up by about 5 per cent. in the last two years, but I think that he will agree that price increases even on this scale are bound to threaten the success of any incomes policy. The trade unions in those circumstances are bound to demand higher pay in order to cover higher prices. That is what they are for. After all, trade unions in what should be a period of economic expansion are not concerned merely to keep wages level with rising prices. They want more than that. If that is all that can be obtained it is not progress, because everybody is standing still; wages go up but they do not buy more.
That is why I am glad to note that at long last the National Economic Development Council—and we must remind ourselves always that the Chancellor is its chairman—and the F.B.I. and the British Employers' Confederation are trying to put things in the right order. They are no longer saying that we must keep wages down to give us stable prices and thus avoid inflation. They are beginning to argue that we must keep prices stable so that increases in wages and other incomes can be contained within our rate of economic growth and by this means we shall avoid inflation.
In other words, stable prices now come first and we must emphasise this because it is germane to the whole argument. This is the answer to the remarks of the hon. Member for Louth (Sir C. Osborne), who is no longer in the Chamber—which helps to solve a lot of difficulties.
If we are to make stable prices the first aim of Government policy—and I hope that the Chancellor agrees with doing that—we must alter radically many of this Government's policies which have deliberately forced up prices over the last decade. As has been admitted by the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid)—who is also not now in his place—the Government are responsible in large measure for the rising level of prices, a level which is now reaching extremely serious proportions.
I feel that I should apologise to the Chancellor for rather strenuously interjecting a question in what I will call the knockabout part of his speech when he appealed to industry, employees, employers and unions to work together. I 545 apologise for shouting my interjection. My excuse is that he goaded me into it, when he declared that he was giving a lead to the nation and said how it was necessary for industry, employers and unions to work together to keep prices stable.
The right hon. Gentleman has not given a lead. He has merely announced an excellent collection of platitudes, but has given no detailed plans. The Government have presented no plan at all to the N.E.D.C. but have merely left all the planning to the council. There is much the Government can and should do to give a really practical lead, not in words but actions.
Let us consider some of the items in the retail price index which have and are increasing in price. Several hon. Members on both sides of the Committee, particularly my hon. Friend the Member for Cardiff, South-East, have referred to house rents and mortgage payments. Without going over the whole issue again, I will refer to the assessment of housing costs made by the city architect of Sheffield, based on the cost of housing in Sheffield, about which, I imagine, the hon. Member for Sheffield, Heeley (Sir P. Roberts) knows something. I draw atten-to one factor in the assessment. The cost of building a house valued at £2,500 works out at £36 a year, while the interest charges on the operation amount to £113 a year, three times the cost of building the house.
Are wages responsible for increasing prices? Of course not. Are the Government incapable of finding a way of getting rid of this intolerable burden of debt on our housing activities? Housing costs must be reduced so that we can bring down the price of rents and thus reduce that part of the cost of living, for it is a very important part. My hon. Friend the Member for Cardiff, South-East explained how the Government had exacerbated the rents problem—the 1957 Act, higher interest charges and extortionate land costs, all of which must be paid for in higher rents. This also applies to owner occupiers and mortgage payments.
The right hon. Gentleman in his speech ran away from this immense problem of land costs, ever-rising rents and house building charges, yet it is, as I say, an important factor in the cost 546 of living. I notice from some of the returns recently published that in some cases rents are now amounting to a quarter of families' incomes. This is a serious problem. The Chancellor has no answer to it and I am sure that the Minister without Portfolio will not give us an answer to it tonight.
As I think the right hon. Gentleman knows, I spent some years as an industrial reporter, and in that time attended scores of meetings and Press conferences called by industrial concerns. It was a fixed rule among the reporters that if the chairman or managing director had his public relations officer sitting by his side and called on him to answer some of the questions, the firm had something to hide and we would not get satisfactory answers.
That is the situation we face tonight. I had hoped that we could have extracted from the Government some constructive ideas on how this serious prices problem could be tackled, not by exhortation—which is, apparently, still the only thing the Chancellor can offer—but with some practical plans, but I know that we will not get them from the "public relations officer".
My hon. Friends have gone through the retail price index to show how prices are still going up. Let me select from the list of foodstuffs one item that has not been mentioned. As the right hon. Gentleman knows, in many cases foodstuffs are the biggest item in the family budget. Bread has gone up 7 per cent. in the last two years. Are the Government taking any steps to check this increase? As far as I can see, they are preparing to stimulate even higher prices for bread and flour confectionery in the Agriculture and Horticulture Bill, now going through another place. Part I of that Bill gives the Minister of Agriculture authority to fix minimum import prices for wheat, flour, and all the other cereals we import; and also to put on taxes to bring import prices to these minimum levels.
In passing, I should mention that it is only a sheer coincidence that this import price and levy arrangement is in line with the Common Market import control arrangements. That, we are told, is only a coincidence, and has nothing to do with any possibility of our going into the Common Market.
547 But the Minister's price-fixing powers under the Bill do not stop there. He can use them for all foodstuffs. As he has told us that the next in line is meat, let us look at what is happening there. Meat prices have so far gone up by only 5 per cent. in the last two years, but though the voluntary import control arrangements that the Minister has introduced, in anticipation of the action he will take when his Bill is enacted, have hardly yet started to work, the prices of Argentine beef in Smithfield—as my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) has said—have already gone up 30 per cent. as compared with prices a year ago. It is quite true that the Ministry will save on food subsidies but, as I am sure hon. Members on both sides who have taken part in the discussions on the Agriculture and Horticulture Bill will agree, it will be extremely difficult for the Minister to check increases in meat prices under the new arrangements he has in mind.
Milk is another important item in the cost of living, and I should be very surprised if, in the present Price Review, the Minister does not agree to another halfpenny a pint on milk prices. Then there are all the items subject to the Purchase Tax—but I shall not go into the long list. The point is that that these things, for which the Government are responsible, add up to a stiff increase in total prices, and add considerably to the burden of the cost of living.
Another worrying thing about food prices of which the right hon. Gentleman does not seem aware is that the factory prices of processed foods are now beginning to go up very considerably, and I am convinced that before long this trend will be reflected markedly in the retail price index.
Yesterday, we were discussing the abolition of reseale price maintenance. Some of my hon. Friends have already mentioned that many firms are already increasing their prices in anticipation of this abolition. I have here a circular sent round by wholesalers who handle photographic materials. It is dated 25th February, 1964, and is headed "Price increases". It reads: 548All photo prices will be increased from March 15th, 1964. These increases will be most apparent in the camera-body and lenses categories, amounting possibly to 6–10 per cent, in these instances, Increased prices for all projectors are already in operation, as you probably know.Then we come to what is a warning to the Chancellor.
The firm goes on to say:We would naturally like to give you a new price list for the week ending March 14th but as Budget Day is exactly one month later on April 14th, we feel that the wisest course is to put a new price list into print as quickly as possible after Budget day, and we have planned accordingly.I have a list of some of the price increases but I will not go into them now. It is obvious that the trend towards higher prices is going on. The Chancellor must agree that the facts given on both sides of the Committee today show this but, as far as I can see, he is doing precisely nothing about it.
My hon. Friend the Member for Cardiff, South-East, has already referred to a survey, of which I thought I was the only Member present to have a copy. It was presented to the National Incomes Commission by the Purchasing Officers' Association. I do not want to go over again the observations made on that survey by my hon. Friend, except to point out that this was a survey by sample, as I think the Chancellor knows, over a wide range of industries covering about 350 firms and supplies worth nearly £2,400 million. This is a big slice of our trading operations.
It is quite clear from this evidence that prices over an immense range of goods have recently been increased far beyond what was reasonable. These higher prices, of course, must eventually influence the cost of living. The conclusions of these purchasing officers, who buy supplies for manufacturing firms and public services, suggest that the engineering wages award should not have increased prices by more than 2½ per cent. or 3 per cent. My calculation, for what it is worth, is that it should have been far less than 2 per cent. The point I want to make about this is that I refuse to believe, from what little experience I have of travelling round industry both in years gone by and recently, that engineering firms cannot in the course of one year so improve 549 their methods and efficiency as to be able to absorb an overall price increase, due to a wages increase, of somewhere between 1 per cent. and 2 per cent.
§ Sir P. Roberts
I referred to this in my speech. The hon. Member knows that there was a backlog of rising costs behind the engineering industry and it is quite improper to suggest that this wages award was the only thing that was being caught up.
§ Mr. Darling
As the hon. Member knows, in many sections of his own industry when lists of increased prices are being sent out the only factor that the manufacturers in many cases refer to is wages. I agree with the hon. Member that there is a backlog, but in many cases that backlog of costs to him is due to the same circumstances—that the firms which supply him have not absorbed their wage increases. This goes on cumulatively. Somehow the Government must step in and deal with it. There are other increases coming along, and in the time left to me I should like to say something about what I think the Government should do.
I will turn to a capitalist country, the United Slates. I think that the Chancellor knows that Mr. McNamara, the United States Secretary of State for Defence, has shown us one way in which a Government can tackle this problem of firms charging too much, or of not being sufficiently price-conscious as to try deliberately all the time to bring costs and prices down. What Mr. McNamara has done is to write to every industrial firm in America that has a defence contract, telling it to cut its costs and bring its prices down. He has done more than ask these firms to charge less for their supplies to the Government. He has sent explanatory memoranda. He has sent industrialists, recruited for the purpose, to explain to the firms. He has called conferences, he has had films shown to illustrate to them how they can bring down their costs and prices, how to cut out the frills, how to introduce new methods and install new machinery, and what kind of new machinery to install for different operations.
By all accounts, this has been a very rewarding policy. The defence costs are coming down and so is the United 550 States defence budget. Why cannot we do this kind of thing here, and not only on Government contracts? There are many ways now being canvassed by which the Government can intervene in order to help industrialists to become cost conscious, and bring down their costs and prices.
The right hon. Gentleman had an opportunity today to try to explain his attitude to some of these suggestions, some of which have been put up to the National Economic Development Council of which he is chairman, but he has not taken advantage of that opportunity. What about a central register of prices? Is this not worth discussing —a register, the idea has come from the employers and not from the trade union side, in which firms intending to increase their prices would have to submit details and prepare to have their costs and trading circumstances examined?
I am glad to see the hon. Member for Reading (Mr. Peter Emery) here. I am sorry that he was not here to hear the tributes that were paid to him and to the work of his Purchasing Officers' Association.
§ Mr. Peter Emery (Reading)
I thank the hon. Member for giving way. I apologise for not being present earlier. I suggest that the hon. Member should have looked at all of the report and not just at those parts of it which are most beneficial to the case that he is making.
§ Mr. Darling
I am sorry that the hon. Member for Reading felt that he had to make that kind of intervention, because he has not heard my speech.
What about a register such as I have described, so that if a case to raise prices appeased on examination to be unacceptable, the firm concerned would have to face adverse publicity, and from that point of view would perhaps have difficulty in obtaining contracts? Of course, this could not apply to consumer goods. By why not look at the possibility of giving to the Consumer Council a bigger staff and opportunities to examine price increases in the range of consumer goods? There are many other ways in which this could be done.
551 The situation in this country really calls for constructive Government action. We must now accept the proposition that stable prices are essential to our whole national well-being. There is no question about it. We cannot contemplate any further trend towards inflation. We have got to keep prices steady, as many of my hon. Friends have said, to prevent any further erosion of the real incomes of our people. We have got to have stability to make possible further advances in social welfare and the raising of living standards, and we must keep prices in this country stable to further the essential expansion of exports on which our whole prosperity ultimately depends.
It is no use, as the right hon. Gentleman did, voicing these unquestioned objectives unless we have a Government that is prepared to act on them. The part that the Government must play in a crucial exercise of this kind is not easy to define, as I am sure the right hon. Gentleman would agree, but the Government have got to create the right kind of atmosphere in which there can be co-operation between industry, the trade unions, the workers, the Government and everybody else. Then, in that atmosphere, with persuasion, publicity and encouragement in every possible way—perhaps in dealing with Government contracts to begin with to show how the thing can be done—we can make sure that everyone in the exercise plays his part.
But at some point, I am convinced, the Government must have the right to step in and order investigations into costs and prices where they appear to be excessive, and, above all, the Government must themselves pursue policies which help to keep costs and prices down and not, by their misguided actions, stimulate price increases as this Government have done.
Our complaint against the Government is that they have not even yet properly understood the problem of prices. This must be so if we are to measure their understanding by their actions. Neither have they properly understood the dangers which we face as a result of their neglect of what is in the modern world a Government responsibility, that is, keeping the price 552 level steady. It is time that this Government got out of the way so that we may have one that will get on with the job.
§ 9.1 p.m.
§ The Minister without Portfolio (Mr. W. F. Deedes)
There have been aspects of the debate which remind us, if we need to be reminded, that we are approaching a General Election campaign. I say at once that I exempt from this the bulk of the speech of the hon. Member for Sheffield, Hillsborough (Mr. Darling), and I acknowledge the constructive note on which he concluded.
I thought that there was a touch of irony, however, in the opening speech of the hon. Member for Cardiff, South-(Mr. Callaghan). During the course of some personal references to me, to which I take no exception, the hon. Gentleman spoke of the "Minister for Party Propaganda". Portions of his speech satisfied me that he has very little to learn in such matters. I willingly acknowledge a craftsman in the subject.
Having said that, I feel that it would be churlish not to acknowledge with gratitude, if with some surprise, the tribute which the hon. Gentleman paid to our social programmes. If I understood him aright, he accepted the programmes as adequate, but he doubted our capacity to achieve them. If he will study the record in education and a good deal else, he will see that the programmes are by no means out of line with what has already been achieved.
On the face of it, it is a little surprising that hon. Members opposite should seek at this moment to challenge comparison between what happened to prices during their period of office and what has happened during ours, making full allowance, as I am prepared to do, for all the difficulties of their years, which were referred to by the hon. Member for West Ham, North (Mr. A. Lewis) and carefully reiterated by the hon. Member for Hillsborough. I accept all that, but, even accepting it, the plain fact is—since a number of facts have gone on the record today, this really must be added—that in those years prices rose, on average, by 6½ per cent. per annum—[HON. MEMBERS: "What about the difficulties?"] I am taking 553 into account all the difficulties. They rose by 40 per cent. in all, food prices rising by about 8 per cent. per year.
§ Mr. Deedes
I am acknowledging the Korean War and all the rest. The fact still remains that, in our 12½ years of office, prices have risen by exactly half that amount, in the past six years by about 13 per cent.
§ Mr. Deedes
I am pointing the contrast.
The average rise in prices under this Administration has been roughly half, and when full account is taken of postwar difficulties, the Korean War, import prices and all the rest, there remains something more than can be explained away. Moreover, it should be added that the removal of food subsidies, in relaxation of rent control and allowing the nationalised industries to charge commercial prices all fell to us. I must add, too, in the light of some of the things said today, that in 1963 the index of retail prices rose by just over 2 points, rather less than in the two preceding years.
Even acknowledging the post-war difficulties of the party opposite, there is this to be added. It inherited and kept in being a number of the wartime controls which, at least, according to its own doctrines, should have contributed to stability. When, after taking office—I remember this well, as will other hon. Members—we gave notice that we proposed to dismantle some of those controls, we were warned repeatedly by the party opposite that this would accelerate the increase in prices. As the record shows, it did nothing of the kind.
Like my right hon. Friend the Chancellor of the Exchequer, I do not think that the subject of the cost of living which we have been debating today can altogether be separated from the subject of the standard of living. This point was made by the hon. Lady the Member for Lanarkshire, North (Miss Herbison). It was made also by my hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts), whose speech was heard with attention by the whole Committee. 554 He was quite right in saying that there is always, at this stage in the life of any Parliament, a tendency to refer to the particular difficulties of the least fortunate, and this is right.
Members of the party opposite, however, know quite well that during the past 12 years the standard of living has risen dramatically, not for a few, but for the great majority. It has risen in reality by about 40 per cent., which is more than in the whole of the first half of this century. This is not a statistic. It is a reality and one which can be well understood by the many millions of people who are enjoying it.
It would be easy, and it would be unfair, to contrast this with the living standards under Socialist austerity. I do not do that. Rather, I remind the party opposite that this increase surely accords with the ideals which have been expressed by the party opposite since its earliest years. Much that the predecessors of hon. Members opposite have fought for over the years has now come to pass. I do not expect right hon. and hon. Members opposite to applaud this in election year. [Interruption.] There is, and there always will be, a minority which justifies not only anxiety, but the criticism of the Opposition. I acknowledge that. The party opposite should, however, at least acknowledge that there has been this major change and not censure it, as hon. Members opposite sometimes do, by implying that it can be demoralising.
Perhaps a this has not been as wisely spent as some would wish. I see nothing surprising in that and nothing to deride in it. Nothing marks the party opposite as being so out of touch as the current attitude which so many of its members adopt to the higher prosperity which is enjoyed by so many.
Of course, that brings problems in its train, and we do not ignore them. I accept at once that while increased prosperity may reduce penury it does not always reduce anxiety. The hon. Lady the Member for Lanarkshire, North referred to young couples who were owner-occupiers. It is true that there are a large number of people, including married couples, and particularly the young, with heavy personal commitments. These, however, are problems of a different scale and from a different age 555 from that to which so many hon. Members opposite are rooted. They arise from an entirely different situation.
The fact is that the margin which divides a family from fear of poverty has widened in recent years for millions Surely this is a matter for rejoicing. One would have expected some slight acknowledgement of it in the speeches by hon. Members opposite today. If they are to criticise—and there always is something to criticise—then it lies upon them to make clear how they would accelerate these current processes. Rising costs are certainly the most serious consideration for the consumer, but it is quite untrue to suggest, as the hon. Member for Greenwich (Mr. Marsh) did, that the Government do not care about this or think that it is a matter of no importance.
§ Mr. Deedes
The policies which my right hon. Friend the Chancellor of the Exchequer has tirelessly pursued, and is tirelessly pursuing, are all directed to the problem of prices and costs. He has reiterated again and again the conditions needed to achieve what the Opposition have been demanding throughout the debate. But rising costs are not the only consideration in terms of this debate. There are others—shoddy goods, short weight and hire-purchase frauds—all of which bear very closely on the subject. Any bad deal for the customer is an invisible rise in the cost of living, and in recent years we have gone some way to reducing the number of such bad deals.
The Molony Report was a landmark in that respect and it has been acted upon. One of its products is the Consumer Council, which marks its first birthday this month. Another is the Hire-Purchase (No. 2) Bill, now in Standing Committee. The third is the Weights and Measures Act, 1963, which bears very acutely on the problem. This was described by the Molony Report as part of the basic vocabulary of consumer protection. In this respect, we have gone a very long way in trying to get for the customer better value for money.
§ Mr. Darling
Would the right hon. Gentleman care to quote the Molony Report on the attitude of the Government to weights and measures legislation?
§ Mr. Deedes
I can quote the Report in a number of directions and not all would be favourable to the Opposition.
I am glad to see here the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater), who suggested that the cost of living had wiped out wage increases. That idea will not stand examination. Of course, it is true—and no one can say that the Government have not made it plain—that real incomes cannot advance faster than the rate of economic growth and that wage and salary increases in excess of that rate of growth will largely be gained only at the expense of others.
§ Mr. Monslow
I accept that there must be a wages policy, but how do the Government expect to have such a policy when, for instance, a five-fold increase in rents has occurred in London during the last few years?
§ Mr. Deedes
The hon. Member's question is not addressed to the remarks which I am making. There can be no question at all of the gains which have been won in this respect by manual workers, even the most lowly paid. I am now directly answering the hon. Lady the Member for Stoke-on-Trent, North. One can take any years in this debate, as I am aware, but I shall take the two years to December, 1963, when the index of retail prices increased by 4.2 points and when weekly wage rates for all manual workers in all industries rose by 8.5 per cent., hourly rates by 8.9 per cent., and salaries by 10.6 per cent., a comparison which stands in respect of even the lowest-paid wage earner. Wage council rates arose by 7.4 per cent. against the 4.2 points increase in prices.
Something was said by the hon. Member for Cardiff, South-East and other hon. Members about the nationalised industries and their contribution in this respect. We have had two main views on this subject. The hon. Member for Greenwich quoted with approval the assertion that the nationalised industries had made a major contribution to keeping prices down, and the hon. Lady 557 the Member for Lanarkshire, North said that we had given rather grudging acknowledgement in some of our attitudes. However, the main criticism of hon. Members opposite was the obligation which we have imposed on nationalised industries to pay their way.
I remind the Committee of the basis of our policy in the words of the White Paper on the Financial and Economic Obligations of the Nationalised Industries:… there are powerful grounds in the national interest for requiring these undertakings to make a substantial contribution towards the cost of their capital development out of their earnings, and so reduce their claims upon the nation's savings and the burden on the Exchequer: this is particularly so for those undertakings which are expanding fast and which have relatively large capital needs.In the light of what has been said in the debate, it is fair to ask hon. Members opposite whether they accept the broad obligation of the nationalised industries to pay their way, or whether they would use them as a means of subsidising the consumer, and in so doing milking the taxpayer, who is also a consumer. That is the question which they must meet.
The hon. Member for Greenwich and others referred to pension and pensioners. The hon. Member spoke of the squalid, deprived life of the pensioner, which was a rather selective phrase. I willingly acknowledge that I have never accepted that the subject of pensions can be adequately dealt with exclusively with statistics. Any major change in the standard of living such as we have experienced—since the war, if hon. Members like—undoubtedly has repercussions on those who have retired which are not wholly met by any pension system, however ingenious or however generous.
Increasingly, life is judged not by an absolute standard—adequacy of food, warmth or clothing—but by the comparative standard. It is increasingly the experience of communities where prosperity increases that one judges by the standards of neighbours in the same street. I acknowledge this. The deficiencies felt, as they are felt today, must be acknowledged, and they go some way beyond what has been said about the level of pensions proposed by one side or the other.
558 All I would say in answer to one of the main criticisms is that we have fulfilled the undertaking which we made in this direction. During the course of the years, we have given increases of National Insurance pensions and public service pensions on five occasions. While, in the light of what I have just said, I would not regard statistical evidence as being conclusive, none the less the figures in this respect bear looking at and quoting.
§ Mr. Monslow
Will the Minister give us, at the same time, the decrease in the purchasing value of the £, and the increase in contributions?
§ Mr. Deedes
The hon. Gentleman makes observations not related to the remarks which I am in the process of trying to deliver.
There has, naturally, been a tendency today to concentrate attention on those who have not fared so well. I accept that as fair. I accept as fair some of the things which have been said. There remains, and there probably always will be, a minority—those with fixed incomes—who have suffered absolute as well as relative decline in their standards of living. I would not attempt to gloss it over, but that is what an incomes policy—what our incomes policy—is about.
It is here that without an incomes policy the heaviest losses are incurred. It is on behalf of those people that my right hon. Friend the Chancellor of the Exchqeuer has reiterated time and again not only the principles needed for sound growth, not only the principles needed for expansion without inflation, but the consequences of ignoring those principles for those whom we are now discussing.
Paradoxically, the acceptance of the doctrine that the increase in incomes must be related to increases in productivity is more important for those with fixed incomes than for the producers themselves. That is not the least reason why an incomes policy is at the forefront of our economic approach, and why we have shown a willingness to fortify it by every possible means.
§ Mr. Callaghan
I have listened with attention to the right hon. Gentleman. When does he propose to deal with the theme which ran through so many speeches from this side of the Committee, namely the scandal of land prices, 559 and its effect on housing rents and on the cost of houses, in view of the fact that according to the index of retail prices the increase in the cost of housing is greater than any other single element?
§ Mr. Deedes
No doubt when the time comes both my party and the hon. Gentleman's party will produce the plans which they think will solve that problem. All I say to the hon. Gentleman is that we shall not solve the problem of land prices with anything in the nature of a National Land Commission. We shall not solve the problem by adopting the proposals put forward by the hon. Gentleman.
§ Mr. Callaghan
I am prepared to debate our poposals at any time, but this Vote is on the Government's administration. Does the right hon. Gentleman accept the Prime Minister's view that it is only through a free market that this problem will be solved? Are we to expect prices to continue to rise? That is what the Prime Minister said on television during a discussion in "Gallery".
§ Mr. Deedes
That is the hon. Gentleman's version, and I must pay attention to it, but I do not accept what he says as evidence.
The battle against rising prices—and here I join issue with the hon. Member for Fife, West (Mr. W. Hamilton)—is not one which this or any other Government can expect to win outright; it is not one in which either party will score a final victory. The hon. Gentleman was right in saying that there was no final solution. Every industrial country in the West has to fight rising prices, as do some other countries. Some are doing it with more success than others. The battle is implicit in the kind of economy that we run and which we like to run, an economy which carries marked advantages which we should be sorry to forgo—full employment, growth, and rising personal expectations.
I certainly do not accept the doctrine of the few, that this is a battle on which ground can be lost without a struggle. Rising prices have to be fought, but there is more than one way of doing it. 560 I say in all frankness to my hon. Friend the Member for Walsall (Sir H. d'Avigdor-Goldsmid) that it will not be done simply by pinning the salaries of Members of Parliament.
I conclude with the thought that the hon. Member for Hillsborough produced at the end of his speech. There rests with any Government an obligation to influence conditions of growth with the appropriate weapons, and these do not include a pool of unemployment, which, in the past, some have not been above suggesting might be the solution of some Tory Governments. My right hon. Friend the Chancellor has exerted such influence and has used such weapons, and has called in new weapons to his aid. Beyond this, a Government really have two choices. One is—[HON. MEMBERS: "Resign."] One is statutory control—[Interruption.] I shall get it across, whatever hon. Members say. One choice is statutory controls. The experience of the party opposite does not convince me—nor do I think that it will convince many other people—that that is the right choice.
The other choice is the force of competition. That is the instrument that we prefer, and in selecting it we give notice that we intend to strengthen our hand. Hon. Members may say that we lack the courage of our convictions. I wonder whether the party opposite would show half as much courage. On the record of the 20 years that we have been surveying in this debate I do not hesitate to assert that our choice is the right one, and that it will be endorsed by the consumers and the electors during the coming years.
§ Mr. Darling
Before the right hon. Member concludes this rather knock-about turn, will he tell us what is the Government's policy to deal with rising land prices? He has been asked several times. Will he now answer?
§ Mr. Deedes
I gave the hon. Member a perfectly fair answer. I said that the time would come when both sides would offer the country their solution to this problem and that we would leave it to their choice with every confidence.
§ Question put, That a sum not exceeding £1,779,405,100 be granted for the said Service:—562
§ The Committee divided: Ayes 208. Noes 269.565
|Division No. 43.]||AYES||[9.29 p.m.|
|Abse, Leo||Harper, Joseph||Paget, R. T.|
|Ainsley, William||Hart, Mrs. Judith||Pannell, Charles (Leeds, W.)|
|Albu, Austen||Hayman, F. H.||Parker, John|
|Allaun, Frank (Salford, E.)||Healey, Denis||Parkin, B. T.|
|Allen, Scholefield (Crewe)||Henderson, Rt. Hn. Arthur(Rwly Regis)||Pavitt, Laurence|
|Bacon, Miss Alice||Herbison, Miss Margaret||Pearson, Arthur (Pontypridd)|
|Barnett, Guy||Hill, J. (Midlothian)||Peart, Frederick|
|Beaney, Alan||Hilton. A. V.||Pentland, Norman|
|Bellenger, Fit. Hon. F. J.||Holman, Percy||Prentice, R, E.|
|Bence, Cyril||Holt, Arthur||Price, J. T, (Westhoughton)|
|Benn, Anthony Wedgwood||Hooson, H. E.||Probert, Arthur|
|Bennett, J. (Glasgow, Bridgeton)||Houghton, Douglas||Pursey, Cmdr. Harry|
|Blackburn, F.||Howell, Denis (Small Heath)||Randall, Harry|
|Bottomley, Rt. Hon. A. G.||Howie, w.||Rankin, John|
|Bowden, Rt. Hn. H. W. (Leics, s. w.)||Hoy, James H.||Redhead, E. C.|
|Bowles, Frank||Hughes, Cledwyn (Anglesey)||Rees, Merlyn (Leeds, S.)|
|Boyden, James||Hughes, Emrys (S. Ayrshire)||Reid, William|
|Braddock, Mrs. E. M.||Hughes, Hector (Aberdeen, N.)||Reynolds, G. W.|
|Bradley, Tom||Hunter, A. E.||Roberts, Goronwy (Caernarvon)|
|Brockway, A. Fenner||Hynd, H. (Acorington)||Robertson, John (Paisley)|
|Broughton, Dr. A. D. D.||Hynd, John (Attercliffe)||Rodgers, W. T. (Stockton)|
|Butler, Herbert (Hackney, C.)||Irvine, A, J. (Edge Hill)||Rogers, G. H. R. (Kensington, N.)|
|Callaghan, James||Irving, Sydney (Dartford)||Ross, William|
|Carmichael, Neil||Jay, Rt. Hon. Douglas||Shinwell, Rt. Hon. E.|
|Castle, Mrs. Barbara||Jeger, George||Silkin, John|
|Chapman, Donald||Jenkins, Roy (Stechford)||Silverman, Julius (Aston)|
|Cliffe, Michael||Johnson, Carol (Lewisham, S.)||Silverman, Sydney (Nelson)|
|Collick, Percy||Jones, Rt. Hn. A. Creech (Wakefield)||Skeffington, Arthur|
|Corbet, Mrs. Freda||Jones, Dan (Burnley)||Slater, Mrs. Harriet (Stoke, N.)|
|Craddock, George (Bradford, S.)||Jones, J. Idwal (Wrexham)||Slater, Joseph (Sedgefield)|
|Crossman, R. H. S.||Jones, T. W. (Merioneth)||Small, William|
|Cullen, Mrs. Alice||Kenyon, Clifford||Smith, Ellis (Stoke, S.)|
|Dalyell, Tam||Lawson, George||Sorensen, R. W.|
|Darling, George||Lee, Frederick (Newton)||Soskice, Rt. Hon. Sir Frank|
|Davies, G. Elfed (Rhondda, E.)||Lee, Miss Jennie (Cannock)||Spriggs, Leslie|
|Davies, Harold (Leek)||Lever, L. M. (Ardwick)||Steele, Thomas|
|Davies, Ifor (Gower)||Lewis, Arthur (West Ham, N.)||Stonehouse, John|
|Davies, S. O. (Merthyr)||Lipton, Marcus||Stones, William|
|Deer, George||Loughlin, Charles||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Delargy, Hugh||Lubbock, Eric||Stross, Sir Barnett (Stoke-on-Trent, C.)|
|Dempsey, James||Mabon, Dr. J. Dickson||Swain, Thomas|
|Diamond, John||McBride, N.||Swingler, Stephen|
|Dodds, Norman||MacColl, James||Symonds, J, B.|
|Doig, Peter||Mackie, John (Enfield, East)||Tavern, D.|
|Donnelly, Desmond||McLeavy, Frank||Taylor, Bernard (Mansfield)|
|Driberg, Tom||MacMillian, Malcolm (Western Isles)||Thomas, Iorwerth (Rhondda, W.)|
|Duffy, A. E. P. (Colne Valley)||MacPherson, Mailcalm||Thompson, Dr. Alan (Dunfermline)|
|Ede, Rt Hon. C.||Mallalieu, E. L. (Brigg)||Thomson, G. M. (Dundee, E.)|
|Edwards, Robert (Bilston)||Mallalieu, J.P.W. (Huddersfield, E.)||Thornton, Ernest|
|Edwards, Walter (Stepney)||Manuel, Archie||Timmons, John|
|Evans, Albert||Mapp, Charles||Tomney, Frank|
|Fernyhough, E.||Marsh, Richard||Wade, Donald|
|Finch, Harold||Mendelson, J. J.||Wainwright, Edwin|
|Fitch, Alan||Millan, Bruce||Warbey, William|
|Fletcher, Eric||Milne, Edward||Watkins, Tudor|
|Foley, Maurice||Mitchison, G. R.||Weitzman, David|
|Foot, Michael (Ebbw Vale)||Monslow, Walter||Wells, William (Walsall, N.)|
|Forman, J. C.||Moody, A. S.||White, Mrs. Eirene|
|Fraser, Thomas (Hamilton)||Morris, Charles (Opanshaw)||Whitlock, William|
|Galpern, Sir Myer||Morris, John (Aberavon)||Wilkins, W. A.|
|George, Lady Megan Lloyd (Crmrthn)||Moyle, Arthur||Willey, Frederick|
|Ginsburg, David||Mulley, Frederick||Williams, W. T. (Warrington)|
|Gourlay, Harry||Neal, Harold||Willis, E. G. (Edinburgh, E.)|
|Greenwood, Anthony||Noel-Baker, Francis (Swindon)||Winterbottom, R. E.|
|Grey, Charles||Noel-Baker, Rt. Hn. Philip (Derby, S.)||Woodburn, Rt. Hon. A.|
|Griffiths, David (Rother Valley)||O'Malley, B. K.||Woof, Robert|
|Grimond, Rt. Hon. J.||Oram, A. E.||Yates, Victor (Ladywood)|
|Hale, Leslie (Oldham, W.)||Oswald, Thomas||TELLERS FOR THE AYES:|
|Hamilton, William (West Fife)||Owen, Will||Mr. Charles A. Howell and|
|Harman, William||Padley, W. E.||Mr. McCann.|
|Agnew, Sir Peter||Arbuthnot, Sir John||Balniel, Lord|
|Allan, Robert (Paddington, S.)||Atkins, Humphrey||Barlow, Sir John|
|Allason, James||Awdry, Daniel (Chippenham)||Barter, John|
|Batsford, Brian||Grosvenor, Lord Robert||Morrison, John|
|Beamish, Col. Sir Tufton||Gurden, Harold||Mott-Radclyffe, Sir Charles|
|Bell, Ronald||Hall, John (Wycombe)||Neave, Airey|
|Bennett, F. M. (Torquay)||Hamilton, Michael (Wellingborough)||Nicholson, Sir Godfrey|
|Bennett, Dr. Reginald (Gos & Fhm)||Harris, Frederic (Croydon, N.W.)||Noble, Rt. Hon. Michael|
|Berkeley, Humphry||Harris, Reader (Heston)||Nugent, Rt. Hon. Sir Richard|
|Bevins, Rt. Hon. Reginald||Harrison, Brian (Maldon)||Oakshott, Sir Hendrie|
|Bidgood, John C.||Harrison, Col. Sir Harwood (Eye)||Orr, capt. L. P. S.|
|Biffen, John||Harvey, Sir Arthur Vere (Macclesf'd)||Orr-Ewing, Sir Ian (Hendon, North)|
|Biggs-Davison, John||Harvey, John (Watthamstow, E.)||Osborne, Sir Cyril (Louth)|
|Bishop, Sir Patrick||Harvie Anderson, Miss||Page, John (Harrow, West)|
|Black, Sir Cyril||Hastings, Stephen||Page, Graham (Crosby)|
|Bossom, Hon. Clive||Hay, John||Parmell, Norman (Kirkdale)|
|Bourne-Arton, A.||Heald, Rt. Hon. Sir Lionel||Partridge, E.|
|Box, Donald||Henderson, John (Cathcart)||Pearson, Frank (Clitheroe)|
|Boyd-Carpenter, Rt. Hon. John||Hendry, Forbes||Peel, John|
|Boyle, Rt. Hon. Sir Edward||Hill, Mrs. Eveline (Wythenshawe)||Percival, Ian|
|Braine, Bernard||Hill, J. E. B. (S. Norfolk)||Pickthorn, Sir Kenneth|
|Brewis, John||Hirst, Geoffrey||Pitt, Dame Edith|
|Bromiey-Davenport. Lt.-Col. Sir Walter||Hobson, Rt. Hon. Sir John||Pounder, Rafton|
|Brooke, Rt. Hon. Henry||Hogg, Rt. Hon. Qulntin||Prior-Palmer, Brig. Sir Otho|
|Brown, Alan (Tottenham)||Holland, Philip||Proudfoot, Wilfred|
|Browne, Percy (Torrington)||Hollingworth, John||Pym, Francis|
|Bryan, Paul||Hope, Rt. Hon. Lord John||Quennell, Miss J. M.|
|Buck, Antony||Hopkins, Alan||Ramsden, Rt. Hon. James|
|Bullus, Wing commander Eric||Hornsby-Smith, Rt. Hon. Dame P.||Redmayne, Rt. Hon. Martin|
|Burden, F. A.||Howard, Hon. G. R. (St. Ives)||Rees, Hugh (Swansea, W)|
|Campbell, Gordon||Hughes Hallett, Vice-Admiral John||Rees-Davies, W. R. (Isle of Thanet)|
|Carr, Compton (Barons Court)||Hughes-Young, Michael||Renton, Rt. Hon. David|
|Channon, H. P. G.||Hulbert, Sir Norman||Ridsdale, Julian|
|Chataway, Christopher||Hurd, Sir Anthony||Roberts, Sir Peter (Heeley)|
|Clark, Henry (Antrim, N.)||Hutchison, Michael Clark||Robinson, Rt. Hn. Sir R.(B'poot, S.)|
|Clark, William (Nottingham, S.)||Iremonger, T. L.||Ropner, col. Sir Leonard|
|Clarke, Brig. Terence(Portsm'th, W.)||Irvine, Bryant Godman (Rye)||Royle, Anthony (Richmond, Surrey)|
|Cleaver, Leonard||James, David||Russell, Sir Ronald|
|Cole, Norman||Jennings, J. C.||Sandys, Rt. Hon. Duncan|
|Cooke, Robert||Johnson, Dr. Donald (Carlisle)||Seymour, Leslie|
|Cooper, A. E.||Johnson, Eric (Blackley)||Shaw, M.|
|Cooper-Key, Sir Neill||Johnson Smith, Geoffrey||Shepherd, William|
|Cordeaux, Lt.-Col. J. K.||Jones, Arthur (Northants, S.)||Skeet, t. H. H.|
|Cordie, John||Jones, Rt. Hn. Aubrey (Hall Green)||Smyth, Rt. Hon. Brig. Sir John|
|Costain, A. p.||Joseph, Rt. Hon. Sir Keith||Spearman, Sir Alexander|
|Courtney, Cdr. Anthony||Kaberry, Sir Donald||Stainton, Keith|
|Craddook, Sir Beresford (Spelthorne)||Kerans, Cdr. J. S.||Stanley, Hon. Richard|
|Critchley, Julian||Kerby, Capt. Henry||Stevens, Geoffrey|
|Crosthwaite-Eyre, Col. Sir Oliver||Kerr, Sir Hamilton||Stodart, J. A.|
|Crowder, F. P.||Kershaw, Anthony||Storey, Sir Samuel|
|Cunningham, Sir Knox||Kimball, Marcus||Studholrne, Sir Henry|
|Curran, Charles||Kirk, Peter||Summers, Sir Spencer|
|Currie, G. B. H.||Lambton, Viscount||Tapsell, Peter|
|Dalkeith, Earl of||Lancaster, Col. C. G.||Taylor, Sir Charles (Eastbourne)|
|Dance, James||Langford-Holt, Sir John||Taylor, Edwin (Bolton, E.)|
|d'Avigdor-Goldsmid, Sir Henry||Lewis, Kenneth (Rutland)||Taylor, Frank (M'ch'st'r, Moss Side)|
|Deedes, Rt. Hon. W. F,||Lilley, F. J. P.||Taylor, Sir William (Bradford, N.)|
|Digby, Simon Wingfield||Lindsay, Sir Martin||Teeling, Sir William|
|Doughty, Charles||Linstead, Sir Hugh||Temple, John M.|
|Douglas-Home, Rt. Hon. Sir Alec||Lloyd, Rt. Hon. Selwyn (Wirral)||Thatcher, Mrs. Margaret|
|Drayson, G. B.||Loveys, Walter H.||Thomas, Sir Leslie (Canterbury)|
|du Cann, Edward||Lucas, Sir Jocelyn||Thompson, Sir Kenneth (Walton)|
|Duncan, Sir James||Lucas-Tooth, Sir Hugh||Thompson, sir Richard (Croydon, S.)|
|Elliot, Capt. Walter (Carshalton)|
|Elliott, R. W. (Newc'tle-upon-Tyne, N.)||McAdden, Sir Stephen||Thorneycroft, Rt. Hon. Peter|
|Emery, Peter||McLaren, Martin||Thornton-Kemsley, Sir Colin|
|Emmet, Hon. Mrs. Evelyn||Maclean, SirFitzroy (Bute & N. Ayrs)||Tiley, Arthur (Bradford, W.)|
|Errington, Sir Eric||MacLeod, Sir John (Ross & Cromarty)||Tilney, John (Wavertree)|
|Erroll, Rt- Hon. F. J,||McMaster, Stanley R.||Touche, Rt- Hon. Sir Gordon|
|Farey-Jones, F. W.||Macmillan, Maurice (Hallfax)||Turner, Colin|
|Farr, John||Maddan, Martin||Turton, Rt. Hon. R. H.|
|Fletcher-Cooke, Charles||Maginnis, John E.||Tweedsmuir, Lady|
|Fraser, Ian (Plymouth, Sutton)||Maitland, Sir John||van Straubenzee, W. R.|
|Freeth, Denzil||Markham, Major Sir Frank||Vane, W. M. F.|
|Galbraith, Hon. T. G. D.||Marten, Neil||Vaughan-Morgan, Rt. Hon. Sir John|
|Gammans, Lady||Mathew, Robert (Honiton)||Vickers, Miss Joan|
|Gardner, Edward||Matthews, Gordon (Meriden)||Vesper, Rt. Hon. Dennis|
|Gibson-Watt, David||Maude, Angus (Stratford-on-Avon)||Walder, David|
|Gilmour, Ian (Norfolk, Central)||Maudling, Rt. Hon. Reginald||Walker, Peter|
|Gilmour, Sir John (East Fife)||Mawby, Ray||Warner-Smith, Rt. Hon. Sir Derek|
|Glover, Sir Douglas||Maxwell-Hyslop, R. J.||Wall, Patrick|
|Glyn, Dr. Alan (Clapham)||Maydon, Lt.-Cmdr. S. L. C.||Ward, Dame Irene|
|Glyn, Sir Richard (Dorset, N.)||Mills, Stratton||Webster, David|
|Gower, Raymond||Miscampbell, Norman||Wells, John (Maidstone)|
|Grant-Ferris, R.||Montgomery, Fergus||Whitelaw, William|
|Green, Alan||More, jasper (Ludlow)||Williams, Dudley (Exeter)|
|Gresham Cooke, R.||Morgan William||Williams, Paul (Sunderland, S.)|
|Wills, Sir Gerald (Bridgwater)||Woodhouse, C. M.|
|Wilson, Geoffrey (Truro)||Woodnutt, Mark||TELLERS FOR THE NOES:|
|Wise, A. R.||Woollam, John||Mr. Chichester-Clark and|
|Wotrige-Gordon, Patrick||Worsley, Marcus||Mr. Finlay.|
|Wood, Rt. Hon. Richard||Yates, William (The Wrekin)|
§ Original Question again proposed.
§ It being after half-past Nine o'clock, The CHAIRMAN proceeded, pursuant to Standing Order No. 18 (Business of Supply), to put forthwith the Question necessary to dispose of the Vote under consideration.
§ Question put and agreed to.
§ The CHAIRMAN then proceeded forthwith to put severally the Questions, That the total amounts outstanding in such Estimates for the Navy Services for the coming financial year as have been put down on at least one previous day for consideration on an allotted day, and the total amounts of all outstanding Estimates supplementary to those of the current financial year as have been presented seven clear days and of all outstanding Excess Votes be granted for the Services defined in those Estimates, Supplementary Estimates and Statements of Excess.