HC Deb 23 March 1967 vol 743 cc1887-91
1. Mr. Judd

asked the First Secretary of State and Secretary of State for Economic Affairs what progress has been made on plans for a permanent prices, incomes and productivity policy; and whether he will make a statement.

4. Mr. St. John-Stevas

asked the First Secretary of State and Secretary of State for Economic Affairs whether he will now make a statement on the Government's intentions in relation to the prices and incomes policy.

5. Mr. Boyd-Carpenter

asked the First Secretary of State and Secretary of State for Economic Affairs whether it is now his intention to seek further powers for the regulation of wages and prices when those under Part IV of the Prices and Incomes Act 1966, lapse this summer.

8. Mr. Gwilym Roberts

asked the First Secretary of State and Secretary of State for Economic Affairs what progress he has made in producing a long-term prices, productivity, and incomes policy; and what steps he is taking to ensure adequate control of prices and profits.

13. Mr. Dickens

asked the First Secretary of State and Secretary of State for Economic Affairs if he will make a statement on Her Majesty's Government's proposals on the future development of the prices and incomes policy.

The First Secretary of State and Secretary of State for Economic Affairs (Mr. Michael Stewart)

I would refer my hon. Friend to my statement yesterday and to the White Paper (Cmnd. 3235).

Mr. Judd

Is my right hon. Friend aware that among most hon. Members there is a conviction that a planned prices, incomes and productivity policy is an essential part of an integrated streamlined economy; that we believe that in a democratic society Government have a rightful part to play in this operation and that this policy must effectively cover the whole range of prices, including rents?

Mr. Stewart

I would not dissent there at all. My hon. Friend will find that there is a section on rents in the White Paper.

Mr. St. John-Stevas

Can we have an assurance that the Government intend to do all they can to maintain this as a voluntary rather than a compulsory policy? Will the Government also give the assurance that they will mend their ways and use the management of the economy as the chief means of keeping prices and wages in relation to productivity and not rely exclusively, or mainly, on the incomes policy?

Mr. Stewart

As to the hon. Gentleman's first point, the Government's view of the desirability of the voluntary element in policy is made quite clear in the White Paper. As to his second point, it has also been made clear that one cannot regard a prices and incomes policy as the sole instrument of economic policy; but I think that there are at least equal dangers in under-estimating its importance and relying on what the hon. Gentleman calls the "management of the economy", which might mean simply trying to get out of difficulties by having widespread unemployment.

Mr. Boyd-Carpenter

Does the First Secretary recall that he justified his incomplete and inadequate statement yesterday by saying that it was necessary so that negotiations could take place? Can he explain how negotiations between employers and workers can effectively take place if neither party knows whether the Government intend to take power to frustrate agreements, as the Government did last summer?

Mr. Stewart

There is no question of taking power to frustrate agreements. Exceptional measures were taken last summer, which it would not be necessary to repeat. The reason why discussion is still necessary is that it is discussion on what the powers and place of the Government, the trade unions and management should be.

Mr. Roberts

Is my right hon. Friend aware that the majority of us on this side of the House completely accept the Government's operation of the prices and incomes policy and completely reject the jungle society of the party opposite? Is he further aware that we feel that the key to the success of such a policy is firm Government action to control and reduce prices?

Mr. Stewart

I am obliged to my hon. Friend. I think that the view he expresses is very widely shared with the country as a whole. On the latter part of his supplementary question, he will notice the effective action that has been taken on prices so far and what is said particularly about price reductions in the White Paper.

Mr. Dickens

Is my right hon. Friend aware that some of us who have hitherto opposed the Government's prices and incomes policy might support a prices and incomes policy that was concerned with a combined operation designed to secure consistent economic growth with a major income redistribution in society?

Mr. Stewart

That, I think, is what we must work for. In my statement yesterday, I tried to set forth the thesis that the prices and incomes policy had had to mean standstill and severe restraint during these periods, but that that is not its permanent nature. Its permanent nature, combined with other instruments of economic policy, is to bring about the result my hon. Friend has in mind.

Sir J. Langford-Holt

Referring to Question No. 8, may I ask whether there is any pressure which makes it necessary to control prices? Is not the problem today rather more one of industry trying to maintain its profitability?

Mr. Stewart

It is true, of course, that profits have felt the effects of recent events, but I think it is quite certain that one could not hope to exercise an incomes policy effectively if profits could become excessive.

If the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) will forgive me, I should like to avoid misunderstanding. He spoke of frustrating agreements, but there is no intention of taking powers to set at nought agreements already made. The question at issue is what sort of agreements ought to be made.

Mr. Mikardo

Why does paragraph 8 of the White Paper propose the lapsing on 30th June of the existing general request for advance notification of price increases? Why is the White Paper in general much more tender and much less direct and effective about prices than about incomes? Will my right hon. Friend accept it from me that we shall start to believe what he says about control of prices when we spend as many evenings in the House debating price control Orders as we have been spending debating wage control Orders?

Mr. Stewart

During the period of standstill and severe restraint there has built up an effective mechanism of notication of price increases between manufacturers, trade associations, and the Government Departments concerned. It will be necessary to make quite certain that the sufficient degree of voluntary notification of prices continues. There are references at the end of the White Paper to the action the Government might have to take in certain circumstances about that. As to the comparative number of price and wage control Orders, I think my hon. Friend will accept that the wisdom with which a policy was being applied could not possibly be measured simply by looking at the comparative number of Orders. I invite my hon. Friend to look at what has happened to the index number of retail prices, which shows that we have exercised an effective and general control.

Mr. David Howell

Further to the question asked by my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), would not the First Secretary of State agree that if the wages bill is to rise by 6 per cent. this year and if output is likely to rise by only 2 per cent., very considerable other measures will be needed besides prices and incomes policy if stability is to be anything like maintained?

Mr. Stewart

These figures are estimates. They must not be taken as absolutely precise prophecies. I made it clear yesterday that this is a cause for concern and it involves the need for both firm maintenance of prices and incomes policy and of other measures, particularly the promotion of economic growth.

Mr. Tinn

Is my right hon. Friend aware that many of us who very staunchly supported the Government, in the House and outside, in their prices and incomes policy, while we might accept that the notification of price increases is effective, are not convinced that the control of price increases is yet effective?

Mr. Stewart

If my hon. Friend will look at what has happened and at the figures, I am sure he will agree that there is not ground for much doubt on his part. It is not possible now, as it was in time of war, to exercise an exact price-fixing arrangement over the whole field. It is possible to see that the general level of prices is kept reasonable.