PRICES AND INCOMES BILL (COMMITTEE STAGE)

HC Deb 03 August 1966 vol 733 cc492-528

4.12 p.m.

Mr. Edward Heath (Bexley)

I beg to move, That Standing Committee B be discharged from further consideration of the Prices and Incomes Bill and that the Bill be committed to a Committee of the whole House. Although this is a procedural Motion, it is one of vital importance. It is a Motion to bring further consideration of the Prices and Incomes Bill back to the Floor of the House. After the Second Reading of the Bill, we on this side of the House moved that the Committee stage should be taken on the Floor of the House. We did so because of the importance we attach to the issues involved in the Bill, and also because we realised something of what the Government might do in a deteriorating economic situation of which we had constantly warned the country. We divided on this, and I regret that on that occasion we were not supported by hon. Members on the Liberal Bench.

I understand the position to be that Standing Committee B has completed consideration of the first three parts of the Bill, together with the Schedules, and did so at lunch-time after being kept sitting by the Government for 20 hours yesterday and today. I think this must be the longest Sitting probably for 20 years. [HON. MEMBERS: "No."] We may perhaps look at the history of this Bill for a moment. It was first promised by the Government ten months ago, in September, 1965, as part of the pledge to those who provided the billion dollar standby in September last. The White Paper was produced in November, 1965. The Bill was first published on 24th February, 1966. No action was taken on it, not even a Second Reading. The Prime Minister preferred to rush to the country before he was asked to account for the situation which is now plain for everybody to see.

The second Bill was not published until 4th July, 1966, more than three months after the Government returned to power. The Second Reading was fixed for 14th July, and ten days later, after a delay of nine months, the Government then demanded that both Houses should dispose of this Bill before Parliament rose for the Recess—and that a fortnight later than it usually does so. In order to achieve this, the Government have had to keep the Committee sitting for 20 hours during the last 24 hours. That record of the history of this Bill and the treatment which the House has had in connection with it shows the dilatoriness of the Ministers concerned, their vacillation, lack of grip and final panic which has caused them to do it with the speed With which they are now trying to rush it through.

This is characteristic of this Government which started off in the splendid way with the Prime Minister's opening words at the beginning of the Session that the highlight of the Government's programme was going to be Parliamentary reform. The situation with this Bill in regard to another place is even more absurd. The Lords have been presented with a White Paper for debate containing an alleged Bill with all the Government Amendments which have so far been presented in Committee as if the Bill had already been passed by this House. This is a display of arrogance by the Government which makes a farce of proceedings in another place and treats this House with contempt. Any Government which assume that this House is going to pass every Amendment which they put on the Order Paper are treating this House with contempt.

We have always made it plain that, although we disagree with the element of compulsion in this Bill, we have no desire to delay it. That has been shown in all the discussions upstairs in Committee. I say now that we do not wish to discuss again the first three parts of the Bill and the Schedules which have been debated upstairs. We are fully prepared to give any undertakings on this. We have put down this wider Motion today. Although it refers only to "further consideration of the … Bill", I understand that it is being treated as a wider Motion. We want to bring the new Part IV on to the Floor of the House for discussion, but we want also to be able today to discuss this procedure in the context of the whole Bill; hence the wording of the Motion. I understand from a study of the last occasion when a similar Motion was put for- ward —in that case a Bill proposed by the hon. Member for Nelson and Colne (Mr. Sydney Silverman)—that I am in order in putting forward all the reasons why we believe that Part IV should be discussed on the Floor of the House, but that I would not be in order to discuss the actual merits of Part IV or of the Bill itself. I shall endeavour to keep fully in order on that basis.

This debate is not, therefore, a Second Reading on the principles or the contents of Part IV and the new Clauses of the Bill which have been tabled by the Government upstairs. That Second Reading would have to come later on the Floor of the House if this Motion were carried. The debate today, as the House realises, is being taken on an Opposition Supply Day. Of course, time ought to have been provided by the Leader of the House, because this in the main concerns the interests of hon. Members in all parts of the House, as the Leader of the House knows full well. I regret to say that he is no longer responsive to the needs of hon. Members in all parts of the House.

This is the second time in the last few weeks—the first was over Vietnam, and now there is this one over this Bill—that the Opposition has had to come forward with the offer of time so that the needs of hon. Members can be met. The Leader of the House expressed pleasure that this debate was to take place today, but of course he refused to do anything about it. I do not think the House will forget for a long time that Motion which was suddenly slipped on to the Order Paper late last Thursday night to be taken first thing on Friday morning when normally not many hon. Members are present. It was to keep Standing Committee B sitting this coming weekend, not only for two hours after one o'clock on Friday, but throughout Saturday and Sunday and any day, even those on which the House of Commons is not sitting. What is more, by removing any power of dilatory Motion it would prevent any hon. Member of that Committee raising the question as to why they were going on sitting or trying to bring the sitting to an end. So we see guillotines, constant all-day and all-night sittings, and shabby, last-minute manoeuvres. This is what the Government are reduced to in an attempt to cope with events which are beyond their control.

We believe that Part IV of the Bill ought to be discussed on the Floor of the House, for the one overwhelmingly powerful reason that it gives powers of compulsion of such a kind to the First Secretary over all prices and wages, setting aside all agreements, arbitration decisions, wages council and agricultural wages council awards, and, indeed, reversing prices and wages, that it amounts to the introduction of a fresh principle into the existing Bill. What is more, these powers are backed by fines of £100 or £500, which can then, if not paid, be followed by imprisonment. We believe that this gives powers to one Minister of such strength and of such a kind that it introduces an entirely new principle into the Bill to which the House gave a Second Reading.

Moreover, these powers will affect every citizen and are of such importance that they ought to be discussed on the Floor of the House, with every Member given an opportunity to express his or her views upon them.

I understand that the Chairman of Standing Committee B has given his Ruling that the new Clauses are in order, though I understand that it will be necessary to alter the Long Title of the Bill later to accommodate this. We accept the Chairman's Ruling completely, though I read that he has pointed out that Part IV is more important than all the rest of the Bill put together. This only supports what I have already said.

Part IV completely changes the scope and the structure of the Bill as it received a Second Reading. The original purpose of the Bill was very clearly laid down in the Explanatory and Financial Memorandum. I recognise that from the point of view of the law this does not carry, but it is a very clear and fair description of the Bill. The object of Part I is to reconstitute on a statutory basis the National Board for Prices and Incomes which we on this side of the House accepted. The object of Part II is to enable notification to be required of proposed increases in prices and charges, of increases in company distributions, of claims and of awards and settlements relating to terms and conditions of employment; and to enable temporary standstills to be imposed in particu- lar cases of proposed increases in prices and charges and of awards and settlements pending their examination by the Board. The Bill gives statutory powers to the Board and also gives powers for a period of delay while the Minister is considering whether matters should go to the Board and then while the Board considers the matter. There are no greater powers than that. That is the fundamental structure of the Bill, and it all rests on the Board.

Part IV does something completely different. It abolishes all this. There is no reference to the Board in Part IV. The Board no longer has any part to play. All the powers are given to the First Secretary for purely arbitrary decisions by him. There is no need for inquiry. The criteria laid down for the Board in Schedule 2 do not apply to Part IV. So the whole of the original structure of the Bill—the creation of the statutory Board and provision for delay pending its operation—has been swept away and in its place in Part IV are put completely arbitrary powers to be given to the First Secretary, without any criteria or any control whatever over this conduct and the way he makes these decisions.

Mr. Sydney Silverman (Nelson and Colne)

The right hon. Gentleman said a few minutes ago that the Chairman of Standing Committee B has ruled that these new proposals are in order because they are within the scope of the Bill. The right hon. Gentleman has also expressed his opinion that they are not within the scope of the Bill because they are outside the whole structure and purpose of the original Bill. If the Motion should succeed, would the right hon. Gentleman regard the question whether these new proposals are in order as still being open?

Mr. Heath

As I understand it, the Chairman of Standing Committee B has ruled—I said that I accept his Ruling completely—that this is within the Long Title and purpose of the Bill. However, the Bill to which the House gave a Second Reading was on the basis of a statutory board being created and particular cases delayed while the Minister and the Board carried through their operations. I argue that the introduction of Part IV creates a new and additional situation embodying a new principle to which the House has had no opportunity of giving a Second Reading.

Mr. Sydney Silverman

I follow that very well. I think that there is a great deal of substance in it. I am not questioning that. If the Motion were carried, the Bill would be recommitted to the House. The House would assume the functions of the Standing Committee and presumably Mr. Speaker would assume the functions of the Chairman of the Standing Committee. I am asking whether, in the right hon. Gentleman's opinion, if his Motion succeeded it would leave the question whether these new proposals are in order still to be decided.

Mr. Heath

I am not challenging the Ruling of the Chairman of Standing Committee B. He has given his decision. Whether, if the Bill comes back to the Floor of the House, somebody else will ask Mr. Speaker to give a Ruling upon this question is a matter for the House and for Mr. Speaker. I myself do not propose to do it, because I have said that we have no desire to discuss the first three parts of the Bill and the Schedules again. We have now accepted the decision of the House that they be dealt with in Standing Committee.

With these new powers, the First Secretary is being made master of the economy. It is to be brought into force by an Order in Council which could be done during the Recess. It is no use the First Secretary saying that he may not use these powers and therefore we ought to leave it to be dealt with in Standing Committee and not on the Floor of the House. The credibility of the right hon. Gentleman and his colleagues, in the House and outside, is now nil. No one can have confidence in the undertakings they give. The Prime Minister himself, if I may quote him again, said this in his famous statement on 20th July, 1966: It is not our intention to introduce elaborate statutory controls over incomes and prices."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 636.] What could be more elaborate than to give complete power to the First Secretary to introduce orders controlling any or all prices and all wages, over-ruling arbitration decisions, agreements already reached, wages council decisions, agricultural wages council decisions, and every other kind of individual agreement? There could be no more elaborate statutory control of wages and prices than that. So once again the Prime Minister has broken faith with the House.

The Prime Minister made his statement on 20th July. On this occasion it was only 10 days later, while he was in Washington, that these Amendments were laid. All that happens is that the periods between the acts of breaking faith get shorter and shorter. What is more, if the Chancellor of the Exchequer is to keep faith with those who provided the standby, no doubt he and the First Secretary will want to use these powers in Part IV which he has now laid in Committee.

One of the reasons why we ought to debate this on the Floor of the House is so that the House can ask why the First Secretary wants these dictatorial powers, because this is against everything which the Prime Minister, the First Secretary, the Chancellor of the Exchequer, and their colleagues have always said. We have had our differences with the First Secretary, but he has constantly emphasised the voluntary process and gone to great lengths to achieve it.

The Prime Minister will no doubt recall his interview on "Election Forum" just before the election began, in which he said this: … once you have the law prescribing wages I think you are on a very slippery slope. It would be repugnant I think to all parties in this country. Certainly I do not think anyone wants to go to the point of prescribing wages by law. As to the idea of freezing all wage claims, salary claims, I suppose, dividends, rents … I think this would be monstrously unfair. The First Secretary, speaking at the N.A.L.G.O. conference on 8th June, less than two months ago, and describing the Bill as it was given a Second Reading by the House, said: There is nothing in the Bill which interferes with the essential voluntary principle on which the policy has been developed, nor is there anything which prevents free collective bargaining or detracts from trade union activities of those who are representing their members in negotiations. Later, he said: It will in no way replace or undermine the voluntary policy". That was true of the Bill to which the House gave a Second Reading, but it is not true of Part IV which the Government are now attempting to introduce in Committee without any consideration of principle by the House.

The Chancellor of the Exchequer himself, in that moving speech to the Labour Party Conference of 1961, said, on the subject of wage negotiations: … we have always argued, that if this system is to succeed, wage agreements must be sacrosanct when they are reached and arbitration awards must be inviolable. He went on to say: … the only safety for these workers, whether they be industrial workers in Government establishments, whether their conditions are determined by Wage Councils, whether they be white collar workers, is in the return of a Labour Government …". The House ought to discuss why the Government are demanding Part IV, and the Government should account not to a Committee of 24 or 25 but to the House as a whole. Of course, the First Secretary may argue that the voluntary principle has failed and that all agreements have been broken or need to be broken now, and that that is the reason why it should be dealt with speedily upstairs and not discussed here.

The First Secretary was very frank the other night in admitting that his incomes policy has failed. It failed because the Chancellor and he ran a grossly inflationary economy at the time when he was trying to get an incomes policy. What is more, the greater success of his campaign against prices undermined the rest of the campaign and fed the inflation.

The First Secretary and the Chancellor, both in the House and outside, have constantly boasted that unemployment was getting lower and lower, and that the number of applications for vacancies was getting larger and larger. This, they said, showed the success of their policy.

The situation has now changed. The Prime Minister accepts unemployment up to 470,000 and has now announced policies to achieve between 1½ and 2 per cent. after redeployment. That puts the voluntary incomes policy in a completely different context from the way it was being operated before, over the 21 months of gross inflation. Therefore, Part IV is not justified, nor is taking it to Committee. The reasons for it should be put on the Floor of the House.

If we want final confirmation of the importance of Part IV, it comes from the Prime Minister himself. In Washington last weekend he boasted. He said: We have taken steps which have not been taken by any other democratic Government in the world. We are taking steps with regard to prices and wages which no other Government, even in wartime, has taken. And, I might add, which no other democratic free enterprise country would dream of taking, least of all the United States Administration. That is final confirmation of the importance of Part IV which the Government are trying to introduce in Committee.

I do not see anything to boast of in what the Prime Minister was saying. That after 21 short months he and his Government should have reduced this country to the state where these powers, unprecedented in peace and war, are demanded from Parliament is not a matter for boasting but for shame. I wonder how gallant and hardy leadership led us into this plight, and what firmness and courage from the Prime Minister while he dithered for 10 days led to the drain from our reserves, with tens of millions of £s flowing away—our very life-blood—and what enterprise from the Prime Minister is leading us now into the most strictly controlled economy which any democratic country has ever had.

There is the proof of what has happened since the Second Reading of the Bill, in the Prime Minister's own statement about powers unprecedented in peace and war. Can the Government really argue, can the Leader of the House attempt to sustain the argument, that the House should not have a Second Reading procedure of some kind on these powers? We had no chance of discussing any of this on Second Reading.

We should have an opportunity in some way now. These provisions are so important and far-reaching that they should be discussed by the whole House and not by a comparatively small Committee. The only real topic for discussion and debate on the new Clauses is the principle. Very little can be done about the drafting once one accepts the principle. The principle must be discussed and we should have an opportunity for discussing it, not in a Committee of 25 but here on the Floor of the House.

If we do not debate the principle on Second Reading of the new Clauses, then on the Floor of the House we shall have no chance on Report in the normal way, because Amendments that have already been debated upstairs are naturally not selected by Mr. Speaker. In any case, there is no Second Reading of the principle but only of Amendments, and on Third Reading we can only reject the Bill as a whole. These provisions cannot be justified in ordinary peace-time conditions.

Mr. R. T. Paget (Northampton)

Why does the right hon. Gentleman assume that there will be a Report stage? [Laughter.]

Mr. Heath

As there are Amendments to be made by the Government, there will presumably be a Report stage. If these provisions cannot be justified in ordinary peace-time conditions, the Government must produce in detail the justification for taking these powers and they should justify their action not in Committee but on the Floor of the House, and when they put forward the reasons for their action it should be the whole House which decides whether or not to grant these powers to the Government, and not a small Committee.

There is naturally very wide public interest in the provisions, because, if used, they will affect all our citizens, and the public should have a report from the full House, not from all-night sessions in a small Committee, which cannot be fully reported in the Press. It is more important than ever that every representative should have a chance to put his views on this part of the Bill. There are many cross-currents in the House, and they too should have full representation, which they cannot have in Committee. Each of the new Clauses has an important principle which should be discussed.

My final point on the technical side of this matter is that if Part IV is implemented everything which we discused in the House on Second Reading is of no account. Therefore, the House will be in the extraordinary position of having given to a Minister immense powers of which it has never discussed the principle or had a Second Reading, the Second Reading which it had given being completely ignored.

We should also be able to discuss in a debate on principle, which we cannot do today, the alternative to the policy embodied in the new Clauses and the alternatives to the First Secretary's having these powers. We should be able to discuss what he will do at the end, or the expected end, of these powers. We cannot do that today.

I believe that in the House and in the country we have now come to what I would describe as the great divide. On 11th May, 1965, the First Secretary of State made what was, looking back on it now, a very remarkable statement: It is time some hon. Members opposite made up their minds whether they believe in a free society and consultation and discussion or in a totalitarian society with the right to direct and control".—[OFFICIAL REPORT, 11th May, 1966; Vol. 712, c. 296.] We on this side have made up our minds. The First Secretary of State has made up his mind, too. He is choosing, under Part IV, what he is pleased to call the totalitarian society with the right to direct and control". We are utterly opposed to it. It is not in that direction that greatness for this country lies. This is the divide between us now. The Government's way, the First Secretary's way, leads, through Part IV to compulsion, to the complete control of the economy—who can visualise right hon. Gentlemen opposite giving it up once they have got it?—and to increasing restrictions on personal liberty, to a freeze on everything, including, above all, a freeze on progress.

We have warned the Government often enough, and we have warned the country that this was the direction in which they would lead. It solves none of our long-term problems and damages most of our prospects. But that is always the way with right hon. Gentlemen opposite.

We believe that it is possible—no one has ever disguised the difficulties—to reconcile a free economy with stable progress and individual liberty—[An HON. MEMBER: "Why did not the Tories do it?"] We maintained individual liberty. We believe that it is possible to reconcile a free economy with stable progress and individual liberty under a Government prepared to take the right action and follow the right policies with fairness and skill.

But I do not want to go into the rights and wrongs of it because, whatever our views may be, this is, as the First Secretary of State has said constantly, repeating it again in winding up the other night, the greatest problem which the British House of Commons has had to face since the war, and it is a House of Commons matter. There can be no doubt that it is here on the Floor of the House that these great matters ought to be debated and settled, not upstairs. Anything less is an abdication of our rights in the House and of our responsibilities to the British people.

4.43 p.m.

The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown)

From someone who was moving a purely procedural Motion, and not at any stage going into the merits, that was quite a remarkable performance by the right hon. Gentleman for Bexley (Mr. Heath). I shall do my best to put the case from our side against the purely procedural Motion, going no more into the merits than the right hon. Gentleman for Bexley did.

There are powerful arguments why Standing Committee B should not be discharged from its labours, but should be allowed to complete them as quickly as possible. To explain them, I must do as the right hon. Gentleman did and, in passing, touch upon several basic considerations. As I see it, there are three questions which are relevant to the demand the right hon. Gentleman makes.

The first, as he himself recognised, is whether the Government were right to call for a temporary standstill on prices and incomes. Second, if the Government were right in so calling, are they justified in seeking temporary statutory powers to reinforce the voluntary action on the lines of the new Clauses which have been tabled in Committee, to which the right hon. Gentleman refers as Part IV. Third, are the Government justified in using their energies and resources to secure the passage of the Bill in Committee and thereafter in the House before the House rises for the Summer Recess? Those seem to me to be the three major issues. They were the three issues to which the right hon. Gentleman addressed himself, and they are the ones on which I now propose to justify our own answers.

First, the justification for the standstill, to which the right hon. Gentleman referred in such strong terms. It is a standstill of a strict character on prices and incomes until the end of this year, leading on to what we have referred to as severe restraint during the second six months.

In his justification of his Motion that we do not proceed as we are now, the right hon. Gentleman referred to what, he said, had happened to the situation generally and to the prices and incomes policy as we have so far been operating it. There is a good deal of evidence, alas, for what he said. The provisional figures for April this year show average weekly earnings for men 7.1 per cent. higher than a year before, average hourly earnings 9.6 per cent. higher, weekly wage rates 5.3 per cent. higher, and the index of retail prices in June was 3 points higher than it was a year ago.

This is not a situation which gives me any comfort, or, I submit, can give comfort to anyone in the House or the country. We are none of us free from our share of blame, and we are none of us, therefore, free from our obligation to do something about it, and to do it quickly. Neither of the two sides of industry, the trade unions and management, can be absolved from blame.

Both have done a good deal. The trade union movement, through the T.U.C., has made, in my view, the most remarkable strides during the last 18 months in adapting its thinking and its machinery to the needs of this situation. It is entitled to great praise for what it has sought to do and what it has, in fact, done. But we must be honest and recognise—this is one of the factors in deciding whether we ought to push on upstairs—that, obviously, part of the failure of the prices and incomes policy to exert a more rapid influence on events stems from the gulf between acceptance by the unions of the policy and their willingness to agree that it applies to themselves in practice.

On the management side of industry, this has to be faced in judging the character of the proposals and their urgency, there have been advances, too, in organisation and in the general spirit of co-operation. But, here again, the past 18 months have shown how wide is the gap between agreement on matters of principle reached at national level and the willingness of individual firms to apply the policy in their day-to-day decisions.

One can say that the Government, also, are not free from blame. They have taken the lead developing and laying great emphasis upon a policy which, however fruitful it may prove in the longer term—I feel confident that it will—did not succeed last year in its primary object of keeping the growth of incomes and of national output in line.

The Opposition, also, are not free from blame. The need for an enduring productivity, prices and incomes policy, was recognised by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) and by the right hon. Member for Barnet (Mr. Maudling) when they had responsibility. They tried, but did not succeed. We claim that what we have tried has been a more constructive version than theirs was. We certainly claim that we have been pursuing it with far greater vigour and purpose, and by developing it in the closest consultation at every stage with representative organisations on both sides of industry we have achieved a basic understanding of the fundamental issues which was totally absent in the days when right hon. Gentlemen opposite were dealing with these matters.

But the bulk of the Opposition—this, also, is a factor in deciding whether the Motion should be accepted—although they now say—some of them have said it all the way through—that the need is as clear as ever it was in their day, have done their best to spread scepticism and disbelief about the policy. If they had helped more, it is at least possible that the policy would have succeeded better and that they would not have needed to complain about the matters that they are complaining about today.

But a more important question than how we apportion the blame—this goes to the heart of the Opposition Motion and to the heart of the right hon. Gentleman's complaint today—is what as a nation, given the present economic situation, we should do now.

Sir Cyril Osborne (Louth)

Get a fresh Government.

Mr. Brown

The Government's judgment of what needed to be done was set out in the statement by the Prime Minister on 20th July, and what we are doing in Standing Committee—what the right hon. Gentleman is trying now to overturn—in part follows that through, and I must, therefore, now examine that.

My right hon. Friend explained in that statement why a standstill on prices and incomes is inescapable if the nation is to have the breathing space it needs. I suspect that this may be a question upon which the views of ordinary people are more sensibly and more soundly based than the views of many politicians or of many office holders and officials in the big national organisations. [HON. MEMBERS: "Name them."] My impression is that there are an enormous number of ordinary people who have come to realise that a continuing process of inflation of prices and incomes does them no good and does the country a great deal of harm. They may not understand the complexities of the balance of payments, but they know that when a wage increase leads to a price increase and, in turn, to another wage increase, this is neither sense nor justice. They can see that our trade must suffer. They can also see the severe hardship that this has caused for pensioners and others whose incomes inevitably tend to lag behind.

All this suggests strongly that the country is ready for firm action on this front, and now. It is looking for a lead, and we should be failing in our duty if we took our cue from the right hon. Gentleman and did not provide it now and right away. It was never to be supposed that it would be an easy matter to secure even a brief standstill, but do not let us exaggerate the difficulties. I ask the House to forget for a moment all the details which seem to us so difficult, which, as the right hon. Gentleman said, one can only mention in passing today, and to reflect on what it is we are asking for in calling for this standstill. The right hon. Gentleman gave the most exaggerated and ridiculous description of what we are asking for, and his Motion, if it is to be fairly judged, must be judged against the exaggerations with which he moved it.

We are not asking for a cut in anyone's rates of pay. That distinguishes us from some previous Administrations. We are not asking for an indefinite, or even a very long, standstill in existing rates of pay or prices. What we are asking for is acceptance that, for the relatively short period of six months, increases in pay, whether already negotiated or not, should be deferred, that in the subsequent six months much more attention should be paid than hitherto to economic and social priorities, and that similar restraint should be applied to other forms of income and to prices.

The right hon. Gentleman affected to believe that these were dictatorial powers which did not justify us in trying to get the Bill through Committee. That is wildly away from the mark. I believe that on both sides of industry ordinary people are prepared to accept that in our present economic circumstances a temporary standstill of this sort makes good sense provided that it is fairly applied. In fact, unlike the views which the right hon. Gentleman has just urged on us, I believe that the people would have criticised us, and rightly so, if we had not called for a standstill at this moment.

Several Hon. Members rose——

Mr. Brown

I listened without one interruption to the right hon. Gentleman. I knew that he was making, from his point of view, a very important speech. I hope that I shall be allowed to do the same, in the circumstances.

We must, say the Government—this is part of our case for allowing Standing Committee B to finish its work—use the next 12 months constructively. If we make sensible use of this breathing space to develop the policy—of which the right hon. Gentleman, quite wrongly, alleged our work will be making a nullity—for productivity, prices and incomes in a way which takes account of our economic and social objectives, it could prove at the end of the day—quite contrary to what the right hon. Gentleman said—to have served an invaluable purpose. This is what our present consultations with both sides of industry are about, because, at the end of the day orderly, controlled and sustained growth is still the only way out for Britain from her problems.

Sir C. Osborne

This is very important. Will the right hon. Gentleman tell the House whether he is convinced that a six months' standstill will be long enough? If it is not, and the pressures mount again, will he ask for the powers to be continued beyond six months?

Mr. Brown

I shall reach in a moment the issues raised by the right hon. Gentleman about what is contained in Part IV of the Bill, the part which he thought ought to be brought to this Chamber, and I will then discuss why we think that a 12-month period, to which we are limiting it, is enough.

I spoke just now—this is another reason for us finishing our work—of the need to ensure that the standstill was fair, which is another way of saying that it must be comprehensive. This means, as the White Paper makes clear—and as our work in the Standing Committee is now putting into the Bill—that the same general considerations which are being applied to prices and incomes must be applied in the field of profits and dividends.

I ought to make it plain that we are not, as a party, opposed to profits. In a mixed economy such as ours, the earning of profits is a necessary incentive over a large part of industry. But one needs, in operating this policy, and in giving it legislative enactment, to consider the basis on which profits are earned. We have set out in the White Paper, Cmnd. 2639, agreed by both sides of industry, the circumstances in which profits may be accepted and the circumstances in which they may indicate a need for price reductions. I believe that the distinction that we are making there is a right one and that we have to give effect to it, and we are doing so in the part of the Bill which the right hon. Gentleman found so offensive.

Dividends are at one and the same time a form of profit—that part of it which is distributed—and a form of personal income. As such, we are putting to the House that it is clearly essential—[Interruption.]. At the moment, I am doing what the right hon. Gentleman did. I am addressing my arguments to the same points that he did, and addressing them to the House. As such, it is clearly essential that they should be subject to the standstill, and the White Paper makes this clear. In view of the extent to which profits are already under pressure, the likelihood is that, in any event, dividends in most cases will be unlikely to rise this year, so we are not at present seeking statutory powers to control them. This may encourage the right hon. Gentleman to let us get on with our work upstairs, but I make it clear that, if it appears that the standstill for dividends is not being observed, we shall not hesitate to propose further action either in the form of further legislation or of fiscal measures.

I want to turn to whether, having called for a standstill of prices and incomes, we are justified in seeking from Parliament, through the Committee upstairs—[Interruption.] Standing Committees of this House are part of Parliament—statutory powers on the lines of the new Clauses we have tabled. The right hon. Gentleman said, quite fairly, that he would not go into the merits and I must be careful that I do not go too far into them. On the other hand, I am entitled to the same latitude that he gave himself and was allowed by the Chair.

We have the benefit of a certain number of precedents to help us. This is not the first occasion on which the Government of the day have tried to secure stability in pay and prices. The terminology has varied on different occasions. In the past, we have talked of a "freeze", of a "plateau", of a "pause" and now we talk of a "standstill". In all these policies, including the present one—and this is where the right hon. Gentleman's argument was so misdirected—we have relied and are relying primarily upon the voluntary co-operation of the community as a whole.

But experience has shown that, even where a large measure of voluntary cooperation is forthcoming, it can be eroded quite quickly by the actions of a minority who are not prepared to co-operate. It can perhaps be argued that, as a nation—and I offer this as a counter to the right hon. Gentleman's argument—we carry to excess our attachment to the principle of fair play. Certainly, in a situation like this, what the ordinary man looks for beyond anything is a feeling that what is being done is fair as between different groups of people. Provided that there is fairness—and this is the justification for the Amendments we have tabled—he is willing to make considerable sacrifices and already we have evidence coming in of decisions that are being taken. But once he feels that there is no assurance of fairness, that people who are not prepared to play the game are getting away with it, his view is radically altered.

This is why, in his statement, my right hon. Friend the Prime Minister, after explaining that the Government regarded the standstill as primarily a matter for voluntary co-operation and emphasising, as I do now—and what we are seeking to effect upstairs—that the Government have no intention of introducing elaborate statutory controls over prices and incomes, went on to say: Nevertheless, in order to ensure that the selfish do not benefit at the expense of those who co-operate, it is our intention to strengthen the provisions of the Prices and Incomes Bill."—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 636.] The right hon. Gentleman the Leader of the Opposition asked whether it was right to do this in the form of a separate part of the Bill—Part IV. We gave most serious thought to the form that these additional powers should take. It might have been possible to have slipped some Amendments into Part II—which would have robbed the right hon. Gentleman of his opportunity today—with the objective of extending the 30-day "early warning" period to six months and the three months' standstill to six months pending an investigation by the National Board for Prices and Incomes. The right hon. Gentleman seemed to argue today that, had we done that, he would not have been making the point he was making.

Sir Keith Joseph (Leeds, North-East) rose——

Mr. Brown

Let the right hon. Gentleman listen. We shall listen to him with great interest. I hope that he will now listen to my case.

Sir K. Joseph

The right hon. Gentleman ignores the fact that Part IV puts him in place of the Prices and Incomes Board.

Mr. Brown

The right hon. Gentleman is not listening to my argument. I shall come to that point.

I am saying that we could have met the case that the Leader of the Opposition is seeking to make by slipping Amendments of the kind I have mentioned into Part II of the Bill. In that way, it might have been possible to provide for a maximum standstill period of 12 months on any proposed price increase or pay award or settlement.

Amendments on these lines would probably have looked relatively simple and harmless, might not have proved to be controversial, and would not have supported either the Motion or the Leader of the Opposition's speech. But we decided against this course and in favour of introducing a new Part—Part IV—for three main reasons.

First, we thought that the way in which the Bill was strengthened ought to reflect the facts of the situation. What the situation calls for is a strictly temporary but nevertheless wide-ranging power in the Government to be able to deal with major breaches in the standstill. We thought that this intention could most clearly be conveyed to Parliament and the country if we added to the Bill a new part which was self-contained and was purely temporary rather than if we tried to weave the additional powers into Part II.

Secondly, we concluded that to proceed simply by amending Part II, while attractive in the way I have described, would really be deceiving Parliament and the country. All we should have been doing had we followed what the right hon. Gentleman seems to prefer——

Mr. Heath

I was not suggesting that. Of course, I would not prefer that. What the right hon. Gentleman has done is to put forward clearly in Part IV that the powers are given to him and not to the Prices and Incomes Board.

Mr. Brown

I will come to Part IV in due course, in so far as I can follow the right hon. Gentleman into the merits of it. My impression is that the right hon. Gentleman would have preferred us to do it the other way. Or, of course, it may be his case that nothing ought to have been done at all at this moment. In that case, let him tell the country, because the country does not believe that nothing should have been done.

Had we altered the Bill by amending Part II, we should have been using the principle of early warning and the procedure of reference to the Board for a purpose which they were not designed to achieve. Our purpose is to put the Government into a position where they can implement by statutory power a general standstill on prices and incomes and that has become necessary in order to hold and reinforce the voluntary policy. It seemed to us that if that was our intention, it was much better to say so openly.

Thirdly, it seemed very doubtful whether, by simply amending Part II, we should secure an effective deterrent to the minority who may not be prepared to observe the standstill on a voluntary' basis. For all these reasons, we concluded that the right course, the most honest course and the course most clearly indicating what we had in mind, was to leave Part II of the Bill intact as the longer-term measure—and that answers the allegation that we have somehow got rid of Part II—and to seek separate and temporary powers for the purpose of reinforcing the voluntary standstill should serious erosion occur.

The right hon. Gentleman the Leader of the Opposition gave a travesty of what the powers are for—allowing for the fact that he altogether ignored the fact that these are reserve, fall-back powers and that the objective is still to get a voluntary policy working.

Mr. Stanley Orme (Salford, West)

If as my right hon. Friend says these powers are only to be held in reserve, why is he in such a hurry to get them?

Mr. Brown

For the reasons which I gave earlier—that the situation is serious and that action must be taken now, quickly and firmly.

The House would wish me to counter what the right hon. Gentleman said in urging his Motion, because this is a very important part of his argument, by outlining the nature of the powers. They are potentially far-reaching, but I should emphasise that they are of a purely temporary nature. The right hon. Gentleman allowed nothing for this. All these powers, whether in force or not, must lapse not later than 12 months from the date on which the Bill receives the Royal Assent and there is no power to extend that period. In other words, if there were in my mind or anybody else's the kind of outlook which the right hon. Gentleman was imputing to us, we would have to come to the House for fresh legislation in order to implement it.

Mr. Jeremy Thorpe (Devon, North)

The right hon. Gentleman is a good democrat and a very senior Member of the House. He is asking through Committee for a power, whether reserve or not, to inflict fines and ultimately to carry the possibility of imprisonment. Does he feel no qualms at all that these matters are not to be discussed in the House?

Mr. Brown

The power to inflict fines or any other penalties are in Part II of the Bill as it stood and as it got a Second Reading. Under the new Clauses which we have put down we are adding no new penalties.

Secondly, I make it plain, as the right hon. Gentleman did not, that the temporary powers outlined in the new Clauses will not be operative until an Order in Council has been made, subject to the affirmative Resolution procedure; that is to say, the powers, should they be brought into force, would lapse unless each House of Parliament within 28 days had by resolution confirmed that they should stay in operation.

Thus, we thought it right to provide—and you would never have got this impression from the right hon. Gentleman's speech, Mr. Deputy Speaker—that no use of these temporary powers could be made without the opportunity for a full debate in each House of Parliament. That has nothing to do with Standing Committee.

The provisions in these new Clauses give us powers to direct that prices or charges or rates of remuneration as may be specified shall not be increased, from the date on which the Order takes effect, without Ministerial consent. The Government are given the power to impose a temporary standstill on prices and charges and on levels of remuneration in those respects where it seems necessary, but that does not mean that in those cases the standstill will be absolutely rigid. There is provision for any organisation or any person wishing to raise any of those things first to obtain the consent of the appropriate Minister.

The second group of powers would give us the right to direct that any price or charge which had been increased since 20th July should be put back to a level not lower than that prevailing before that date and should not be raised during the period of standstill. In each case there would be a period during which the Minister would have to give notice of his intent before doing so and there would be opportunities for representations by those concerned.

I now come to the subject of penalties. Let me make it quite clear that the sanctions for offences against any Order or direction under this Part of this Act, were this part of the Act ever to be invoked, are exactly the same as the sanctions which the House has already authorised under Clauses 11 to 16 of the Bill to which it gave a Second Reading. Proceedings would, as in the case of offences under Part II, still require the consent of the Attorney-General. Trade unions and employees would still have the statutory protection conferred by Clauses 16 and 17 of Part II.

Clearly, if all concerned would accept the standstill as being in the national interest and accept it on a voluntary basis, that would be by far the best course and the legal problems would be avoided. But we believe that it is necessary to give temporary protection, as we are, to the majority who co-operate.

The third and last question which is relevant to the debate and to the right hon. Gentleman's speech is that of speeding up the passage of the Bill, using our resources and our energy to get it through the House and using the procedure already in operation, that of a Standing Committee, to add this new part to the Bill before it returns to the House for its Report and Third Reading stages. My right hon. Friend made it quite clear on 20th July—and the Opposition are entitled to disagree if they like, although I did not gather that that was what the right hon. Gentleman was doing—that the country faces a critical situation.

A critical situation calls for vigorous action. If it was right to call for a standstill at all, if it was right to seek temporary powers which I have described, it must be right to try to secure their passage through Parliament as quickly as our procedures and adequate opportunities for discussion permit. It could hardly have been right in that situation to postpone the issue while we all went away.

The right hon. Gentleman suggests, and is supported by hon. Members opposite in the suggestion, that because the temporary powers now sought are different from the original Prices and Incomes Bill—the long-term permanent legislation which will still be needed and which will still be there when this new part dies in 12 months' time—the Government should have withdrawn the Bill and started again with another Second Reading. Leaving out the consequences of that to urgent and vigorous action to deal with a critical situation, I regard that as an absurd suggestion.

The decision that the additional powers now sought fall within the scope of the Bill is not a Government decision. Although he found it very difficult to deal with an intervention, the right hon. Gentleman made it very plain, in words which could not be misunderstood, that he accepted the decision by the appropriate authority, namely, the Chairman of the Committee, acting independently, acting on independent advice, that these powers were within the scope and structure and purpose of the Bill.

That being so, there can be no basis for the Motion. It may be inconvenient for the right hon. Gentleman that that decision was made. It was made after right hon. and hon. Gentlemen opposite had advanced every argument and it was made with the Government advancing no argument at all, but leaving it to independent decision. Given that decision, no Government, in this situation, could have acted differently.

The Opposition were perfectly entitled to take this opportunity today to raise the whole matter on the Floor of the House. I make no complaint of that. At the end of the day, we shall have had a debate which, whatever we say, will have served as something like a Second Reading debate on the new Clauses which we shall discuss in greater detail in Standing Committee.

However, in the light of the situation and what I believe to be the rights of Parliament, in the light of what I believe to be the requirements—[Interruption.] The Committee stage is a part of the Parliamentary pattern—but also in the light of what I judge to be the demands, needs and requirements of our people outside, I must advise the House to reject the Motion.

I believe, and so do my colleagues, that the country recognises that the urgency with which we are treating this problem reflects the needs of our situation. They are expecting a firm lead today. I draw hon. Members' attention to the leader in The Guardian this morning, on this subject. We can give the country that firm lead by going through with the Bill, upstairs and bringing it back to the House next week. I believe that we all now have a duty to go out to the country and call on our people to join in the battle and to win it quickly.

5.20 p.m.

Mr. Peter Kirk (Saffron Walden)

The really tragic thing about the speech that we have just heard is that the First Secretary seemed to be incapable of understanding what this debate is all about. We are not debating the new Clauses, however much he may wish that we were. We are debating the conduct of the Government in relation to this Bill, in particular the way in which they have sought to evade any general discussion of the new principles they are now introducing. It is to that which I shall now turn because these new principles are of very great importance.

It may be true that, technically, the Government have the right to introduce new matters, even new material as wide-ranging as this, into a Bill that already exists. What is certainly not true is the right hon. Gentleman's attempt to say that this really was not a matter of very great importance, that these were only temporary powers, stand-by powers, and that possibly he would not use them and even if he did, the fines contained in the new Part IV were all contained in the existing Part II. First of all, it appears that he cannot recognise that although the fines are the same, the offences are different. He is putting new offences into statutory terms, although the penalties for them may be the same. He is creating a new category of offences without this House ever having considered the principle.

The second point which illustrated that the right hon. Gentleman did not understand the subject was his statement that the Government were justified in their action because the Chairman of the Standing Committee had ruled that the matter was within the scope and structure of the Bill. The Chairman had not ruled that when the right hon. Gentleman put down his new Clauses. The Chairman ruled that at half-past eight yesterday evening and the right hon. Gentleman cannot possibly have known what was in his mind when he put down the new Clauses.

We all know that there are ways and means of using the procedure of this House to do things which the House and the rules of the House never intended should be done under them. The whole basis of a democratic Government is not only that it uses the rules, technically, to get round a difficult corner, but that it plays the game within the meaning of the rules and not within the rules as they are, precisely and technically. The proceedings of this Bill and the Amendments to it have shown that the intentions of the right hon. Gentleman and the Government were to avoid the widest possible discussion of these new Clauses because the right hon. Gentleman knew that it would be embarrassing.

There was the attempt, referred to by my right hon. Friend the Leader of the Opposition, to slip through, at the dead of night, a Motion in this House which would have kept the Committee sitting right through next weekend and would also have deprived the Opposition on the Committee of one of its most vital and basic rights. That Motion was put down after II o'clock one night for debate at 11 o'clock the next morning. This is perfectly in order, and there is no reason why it should not be done, except that only a few hours before the Leader of the House had made a Business statement in which no mention at all was made of this attempt.

Then the right hon. Gentleman comes along today and says that we are in effect having a Second Reading and he welcomes that. He might do, but he did not show any enthusiasm for having it earlier—the Opposition had to provide the time. What one wants to impress upon the right hon. Gentleman is that he can have his; Bill, he is going to get it anyway. He can have it in a perfectly democratic fashion. This is a national crisis and in a time of national crisis we have to make sacrifices, even for our own convenience. If he had proceeded in the normal way, I, at least, and I believe that a large number of hon. Members of this House were perfectly prepared to go on sitting until he had his Bill. We would have sat for the rest of this month if he had wanted us to do so. [Interruption.] The Paymaster-General is only too anxious to get away on his holidays, but I am quite prepared to sit here for as long as this Bill is here, even though it will be inconvenient to me. What we have had is a travesty of Parliamentary procedure.

In his heart of hearts, the First Secretary knows this to be so. This is legislating by the back-door and trying to get round the problems which he knew a Second Reading debate would create for him. It is because of that that we believe it is of vital importance that these matters should be discussed here and not by a Committee of 25 very tired men—and tired they must be. I can quite understand that the right hon. Gentleman is tired. I have no doubt that he has been up all night working, and that may be one explanation for his speech. I beg him to realise that there are people in this House who feel very strongly about this sort of thing from whichever Government it comes.

I have clashed with my own party before now on this, and I have no hesitation in clashing with the right hon. Gentleman. I beg him to realise that this is not just a technical question; this is something that goes right to the root of the relationships of Government and party. We are constantly complaining in this House that Parliament is coming more and more into contempt. No wonder if the Government are treating it in this way. If this Government are sincere in their intention to make Parliament more responsible and effective, as the Prime Minister has said, then one of the first things that they must do is ensure that matters of principle of this kind are discussed in a proper fashion, in a way that they have not been discussed on this occasion. For that reason, I fully support this Motion and hope that the House will support it.

5.28 p.m.

Mr. Charles Pannell (Leeds, West)

I am as sensitive as anyone in this House about the practices of this House, and I do not think that lectures come well from the Leader of the Opposition. I can remember 1956 and Suez, when he was rushing around this place like a scalded cat, as the Chief Whip of the other side, and the slogan was, "Your constituency or your conscience". One remembers Mr. Nigel Nicolson, and Sir Frank Medlicott, who have now left public life because of the whipping on the other side.

One remembers one's intimates on the other side in those unruly scenes, when possibly Parliament reached an all-time low, when we knew that the then Leader of the Opposition, the late Mr. Gaitskell, had only been given ten minutes notice that this country intended to go into a state of war. These are not the sort of people to lecture us. The right hon. Gentleman the Leader of the Opposition is a sort of political Billy Graham. He always starts off by saying, "I believe". One insult which he always hands out is to say that someone is incompetent. He called me incompetent when I arrived in the House two minutes late on a famous occasion. I would have called myself a lot of things that day, but not incompetent. In his own job the right hon. Gentleman is notoriously incompetent and casts a feline slur over everything he says.

On procedure, I dislike the monstrous charade going on upstairs. I dislike beds being brought in for tired men. [HON. MEMBERS: "The Committee does not like them."] Of course the Committee does not like them. In the same way, in the last Parliament, as Minister, I disliked having to provide beds for the sick and lame. I remember with great sorrow that my constituency Member and close friend, Norman Dodds, went through the Lobby once too often.

Before we get on to these other questions of Parliamentary procedure, of things done in time of emergency, we should start cleaning things up. During their 13 years, the Tories did nothing for private Members. Their enthusiasm for the Legislature was born only of the days when they came back to opposition. To those of my hon. Friends who do not like some of our procedure, may I say that it is useless protesting about the mediaeval pantomine which takes place on the opening of Parliament if we cannot speed the procedures in the House in a time of genuine national emergency. The test of Parliament is whether it is sufficiently flexible an instrument that it can bring everything to bear when the need arises.

I wish to say a word or two to my friends on the Front Bench about things which I think they have underrated. Let us not underrate the hardship and, indeed, blatant injustice of what we are considering to doctors and young hospital doctors who work long hours while being disastrously underpaid. I often have reacted sharply to some of my audiences in the country when I have been told, "You have given increases to the doctors and judges but not to the railwaymen". I put young doctors among the genuine hardship groups. We know that merely by accident the dentists have got by but that the doctors have been stopped. We must weigh up in our minds whether greater hardship has been caused to the doctors than to the railwaymen who called off a strike on the Government's pledged word.

There are many other public servants, apart from the doctors, whose firm expectations, backed by firm agreements, are now to be disappointed. This is money which the Government contracted to pay and which will now be irrevocably lost to the staff. The public sector—and this is what I want to say most emphatically to the Government—cannot be expected to take all this alone.

I sometimes think that there is not enough grass-roots knowledge on the Front Bench about what trade unions think. Sam Gompers, the great American labour leader, was once asked "What do trade unions want?" He said, "More". He was then asked, "And what else?", and he said, "More". Trade unions, by their very nature, cannot be expected to agree to phoney voluntary freezing. That is not their function. George Bernard Shaw said that they are instruments within a capitalist society; and they are.

The T.U.C. should not be put in the position of even seeming to advise. This puts a premium on the real friends of the Labour Party and of the Government within the trade union movement. Suppose that the Trades Union Congress came out against this. Do we then appear to flout it? What about the Labour Party Conference? I am sure that there must be some members of the Front Bench who are grateful to the late Hugh Gaitskell for the enunciation of the doctrine of the paramountcy of the Parliamentary party.

Do not let us talk about increased production. I think that I should be out of order in doing so, but, in case I am not, I ask hon. Members to tell me anything in the field of production which will yield results in under 12 months. How can we expect unions voluntarily to surrender pay due to their members under a firm agreement? To talk of a voluntary wage freeze is to ask unions to pervert, indeed to reverse, their purposes. In many cases, executive councils have no constitutional power to volunteer to break or breach agreements. In the public sector, all that is likely to be voluntary is that the Government will volunteer to refuse to pay the money. That would be pure "Selwyn" unless the Government clamped down on the private sector as firmly as they have resolved to clamp down on the public sector. All or none is the only basis on which to work. To make it work, it must be all. To make it all, we must impose the discipline of the law.

On the passing of this Bill—this is a view rather different from that advanced by the First Secretary—the Government must, in my view, slap down an affirmative Order straight away. The Government must show that they will govern. They must have the guts to govern or the grace to get out. I wish to say this as one whose roots in the trade union movement go back to 1918: this is the kindest thing in this situation for the Government to do for their friends. When I say "for their friends" I speak of the trade union movement, the backbone of this party from which it was born.

The Government must take responsibility on themselves. There can be no exceptions. The British people, who are the most mature electorate in the world, understand fair shares; but they do not understand back-sliding. To his credit, the name of my right hon. Friend the First Secretary has been associated with the voluntary principle. Whatever else might be said, no man could have done more in implementing his opinions with enthusiasm, energy and very considerable ability. I do not wish to indict anybody, but it just did not come off. We did take out more than we put in, and the T.U.C. failed to control the situation; I put it no higher than that.

This is a problem which we largely inherited, but I do not indict anybody for that. We must take our share of responsibility, having been in power since October, 1964. We must ask ourselves the simple question: is there a crisis? I do not think that there is an hon. Member who doubts that there is a crisis. There is a deep crisis. Therefore, is it serious enough to do all these things, even to indemnify ourselves against breach of contract?

We ask for a breathing space to save the £. We cannot hope to satisfy world opinion and everybody in the Parliamentary Labour Party at the same time. To the extent that we try to mollify the latter, we dissatisfy the former and render almost completely nugatory our remedies. Ministers must not strive to explain away these cuts, to explain away these remedies, or to suggest that they are less than they are, because if that belief gets over then the seriousness of the crisis will not be believed at all. They should not say that they are not so tough. What we are doing—let us face it—is tough. It is harsh. To many it will be seen to be cruel, and even unjust. But what is our answer to all this in the present situation? Our answer is that we do this because we must. We have heard no credible alternatives to the proposals put up, and the only argument seems to be that we have not used the right machinery, or that we should have used more dilatory machinery, so that it did not react as strongly as this does. We are doing this, as we consider it—certainly as I consider it—for the overriding good of our people.

Perhaps we are deciding here—and I would put this to my hon. Friends—whether the British people are to be permitted to have a Government of their own choice. An hon. Gentleman opposite laughs, but I had that feeling most strongly upon me in October, 1964. I have always understood, of course, that a Government of the Left are subject to most considerable attacks from the great forces which are opposed to them. This is an issue at stake, as to whether the great financial forces outside the control of the British people themselves will allow them to have the Government of their own choice. Nobody can doubt that our present weak position in the world impinges strongly upon our right to have a foreign policy. I remember one of the famous Gaitskell conditions about going into Europe—I disagreed with him—"an independent foreign policy of our own". In this present concept we have not got an independent foreign policy.—[HON. MEMBERS: "Hear, hear."] Of course we have not. That is what I mean when I say, are the British people going to have a Government of their own choice?

And Government does not only mean the number of Members on this side of the House, but the people outside the House—the sovereign people, standing on their own feet, doing the sorts of things they want to do. It is that principle which overrides all the other considerations and all the many other prejudices and loyalties, and which I have learnt from the trade union movement since I was a boy.

We are doing this thing because we wish ultimately to redeem the hopes of those who have put us here. In my view, we can do no other.

5.42 p.m.

Sir Spencer Summers (Aylesbury)

With a good deal of the speech of the right hon. Member for Leeds, West (Mr. C. Pannell) to whom we have just listened I would myself find no fault, because it savoured of a good deal of realism. His description of trade unions being summed up as wanting more, and after that, more, is not one which I would regard as inaccurate or offensive, but what he said, in effect, was that the kind of Bill with which we are here concerned was necessary because trade unions were not to be relied upon to do that which was needed in the national interest, if they were left with the power so to do. He told us that trade unions were, in fact, asking to have their freedom removed from them for a time on the grounds that there was no option. It was for this reason that I understood him to be arguing that this Bill was a proper one at the present time. He told us that the Bill would indemnify the Government from breach of contract.

Mr. C. Pannell

I will not contradict the hon. Member now, but perhaps he will read me in HANSARD tomorrow morning. I can only say I would not have believed such misconstruction could have been put on the things I have said.

Sir S. Summers

The hon. Member may not believe that, but it was perfectly clear and I listened very attentively to what he had to say. Those who read his speech in HANSARD tomorrow will see whether I have misled the House in so describing it.

I should like to apologise for the fact that I was prevented by a Committee upstairs—not Standing Committee B—from hearing my right hon. Friend the Leader of the Opposition, and most of the speech of the First Secretary, but what concerns me here is the utter transformation of a Bill which was colloquially described as an early warning Bill into a Bill which one may fairly describe as a compulsory freeze Bill, which is utterly to transform the character of the Bill which we originally debated on Second Reading. It is for that reason, fundamentally, that I go along with those who criticise the Government for the procedural handling of this matter.

In its original form there was a specious attraction in the idea of an early warning Bill. Last night I listened to part of the debate in Standing Committee B, when the Committee was discussing the Question, "That Clause 6 stand part of the Bill". Clause 6 is the first of those Clauses which go beyond the original conception of an early warning Bill and introduces elements of compulsion. The First Secretary, at the time I have in mind, was concentrating upon the original shape of the Bill. He thought it was very strange that anyone should find fault with the proposition that, because of the delay made necessary in prices and incomes, under the Bill what he termed a third party would be brought to bear, in that the third party was the national interest, in deciding whether to have increases in wages, prices, dividends or other matters. He thought it was very reasonable that the third party of the public interest should be obliged to be considered during the delay which was here involved.

I could not help remembering the days when my party sat on that Front Bench opposite asking that arbitrators, among other things, should have regard to the national interest in giving awards and in the decisions which they made, and the howl that went up of how improper it was that arbitrators should have any regard to the national interest. And here we are asked to treat as almost axiomatic that it is proper for the national interest to be introduced. What a contrast!

It is not as though the national interest could readily be defined. We were told that there are to be no fewer than three sets of criteria which are to be defined to cover the phrase "the national interest". There are the criteria which are built into the Bill; there are the criteria which are to operate during the six months of the compulsory freeze; and there is the third set of criteria, evidently, which is to operate during the six months of severe restraint. Even if the criteria remained constant it would not be difficult to find people who would in a particular situation in fact arrive at completely contradictory conclusions.

In other words, this idea that there can be brought to bear a fixed yardstick of public interest by which increases in pay and prices can be measured is a complete illusion. The definition of the public interest is so different as seen by different people that I believe it to be a complete illusion to assert that it is a necessary procedure to delay for that type of scrutiny to take place before awards are given.

If the delay is enforced under a voluntary standstill and the alleged public interest is brought to bear and the proposal is found to be contrary to it, unless the compulsory element is introduced by order, the parties will have a complete right—the First Secretary made this quite plain last night—to ignore the test which that person or persons has had to apply. If the public interest is deemed to be contrary to one increase in pay or prices after another, what will follow? There will be a universal demand for compulsion. On the other hand, if the result of applying this test to the award of increased pay or prices is to find them in accord with the public interest, then the delay will have been no more than a waste of time.

It seems to me that even the voluntary element here is founded on completely specious arguments, and it is quite wrong for one of my hon. Friends to suggest that a Conservative Government might one day be glad to have that delaying process available to them to enable further thought to be given to proposed changes in prices and incomes. To hold that view does not entail any suggestion that the Prices and Incomes Board is a waste of time; far from it. Whether the deed is done before its consideration is given seems to be entirely secondary; for an objective view to be brought to bear on changes of that kind, even after the event, can be of considerable value in helping to educate people to discipline themselves and to exercise a measure of restraint.

I think that where we go wrong is to suggest that there is a proper executive function for an impartial body of this kind bringing its judgment to bear and having the right to see that that judgment is enforced. We are told—and in the closing stages of the First Secretary's speech I heard the right hon. Gentleman refer to it again—that Part IV, the freeze, is only to last six months and that after that there is to be a period of six months of severe restraint. What guarantee have we that the period of the freeze will be confined to six months, with another six months of severe restraint to follow it?

We were told by the right hon. Member for Leeds, West, who is not in the Chamber at the moment, that the trade unions, released from the freeze, may be expected to ask for more and yet more again. What is to happen at the end of this time when the compulsory freeze is removed? The longer that it remains, the greater the pressure behind the dam which will follow from the consequences of imposing it in the first place.

Why is it done? We are told that it is to demonstrate to the world the determination of the British people. Does it really require a law to indemnify people from breaking contracts to demonstrate the determination of the British people to get out of this crisis; that no one is to be allowed, however great his increase in productivity, to have a greater reward for his efforts? When these announcements were made some weeks ago, hon. Gentlemen below the Gangway opposite were the first to say that Britain cannot be expected to get out of her troubles if restrictions and restraints are put on every prospect of expansion, and they were quite right. Not only in the House but among many people outside there is confusion between the deflation which the Government quite properly bring forward in an attempt to preserve the value of the £ and the freeze on wages. The freeze is a different kettle of fish entirely, but it is being advanced for allegedly similar motives. To my mind, they are completely different affairs.

I do not believe that those who have an influence over the value of the £ are impressed by the fact that contracts are to be broken and that those who have every right to expect the second half of a wage award are now to be denied it. I do not believe that they are impressed by this kind of determination of the British people. Moreover, it is only too likely that those who put justice first and, so far as they are able, refuse to accept the verdict of the Government will be highlighted, and every time that there is objection taken in some physical form to the imposition of this legislation, it will be described as a weakening of the will of the British people. It is one thing to cut down spending power by increases in hire-purchase terms, Purchase Tax or other matters of that kind. It is quite another thing to put the whole British economy in a straitjacket, in the process inevitably restricting investment in British industry. I regard this freeze as futile and highly dangerous.

I have already referred to the situation which inevitably will arise when the dam is deliberately removed. However, there is another risk which should not be lost sight of, and that is that there are many who seek to gain positions of power in the trade unions. Their prospects of getting adherents for their point of view will be greatly increased if the official leaders of the unions are denied the propect of an increase in wages for those whom they represent. It will be only too easy for Communist agitators to suggest that those who go along with a Government imposing a freeze are not the kind of people whom it is in their interests to appoint as their representatives, and that if they transfer their allegiance to less responsible people they will get more money in their pockets as a consequence.

The freeze is alleged to apply not only to wages and salaries but to prices as well. It is very much easier to apply a freeze to prices of all kinds than it is to wages of all kinds. I do not want to give a catalogue of the ways in which the wage freeze could be circumvented, because that would only put ideas into people's heads. The fact remains that it does not require much imagination to realise that those whom it is thought deserve a reward unquestionably will get it in some form if it is thought sufficiently compelling. This law will not stop them. The same does not apply to prices. If we end up with a rigid block on dividends, prices, rents and I do not know what else, and a series of leaks in the wages front, it will merely mean that Government controlled inflation will become even more than we have had hitherto. It is an encouragement to cheat, and I hope that it will be resisted. Even in war time, the black market was evidence of the weakness of human nature, and I would not be surprised if that weakness of human nature came out again.

The right hon. Member for Nuneaton (Mr. Cousins), in a much clearer speech upstairs last night than the one which he delivered in the House a little earlier, said that a wage freeze was thoroughly bad for labour relations. He had previously chided some of my hon. Friends for not understanding what goes on in factories and in the trade union movement. I take it, therefore, that we are entitled, on his assessment, to have regard to his interpretation of the consequences of this Bill. I am sure that it will be bad for labour relations, and that is another reason why I am sure that any form of freeze is not called for at this time and should be resisted at all costs.

We are told that the object is to give the Government time to think. We were told at both the last elections that all the thinking had been done——