HC Deb 22 February 1968 vol 759 cc618-25
1. Sir C. Osborne

asked the Secretary of State for Economic Affairs whether he will impose a more stringent statutory wage standstill.

7. Mr. St. John-Stevas

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

24. Mr. Eldon Griffiths

asked the Secretary of State for Economic Affairs whether he will make a statement giving an up-to-date assessment of the effects of devaluation on the Government's Prices and Incomes Policy.

29. Mr. Edward M. Taylor

asked the Secretary of State for Economic Affairs whether he will introduce further legislation to restrain wage and price increases.

The Secretary of State for Economic Affairs (Mr. Peter Shore)

The next stage of productivity, prices and incomes policy is being considered by the Government. It will be the subject of further consultations with the Confederation of British Industry and the Trades Union Congress. A statement about future policy will be made in due course.

Sir C. Osborne

Will the right hon. Gentleman give the House an undertaking that no such legislation will be introduced during this Session of Parliament? Or is he, alternatively, going to give way to the C.B.I's demand this morning?

Mr. Shore

I can give the hon. Gentleman no such undertaking. The Government are concerned to see that the voluntary system does not break down. They will not hesitate to strengthen it, and, if need be, to take new powers, as my right hon. Friend the Prime Minister made clear in his Answers on 18th January.

Mr. St. John-Stevas

Can the right hon. Gentleman confirm or deny the report in The Times today that the Government are considering the introduction of a 12 months' statutory ban on wage increases over the Government's figure of 3½ per cent.?

Mr. Shore

No, Sir. I cannot deny or confirm it at this stage. As is well known, the Government are considering, the next stage in the incomes policy, and are considering all matters that are relevant to it.

Mr. Taylor

What about prices? Is the right hon. Gentleman aware that the nationalised industries are driving a coach and horses through price stability? Is not the 10 per cent. increase in cheap railway fares in Scotland, announced yesterday, yet another example of how Government organisations themselves are destroying price stability?

Mr. Shore

As the House knows, the Government are as much concerned with prices as with incomes. It was only two or three months ago that prices and charges in nationalised industries were referred to the National Board for Prices and Incomes, along with major manufacturing industry prices in the private sector.

Mr. Atkinson

Is my right hon. Friend aware that from July, 1966, to July, 1967, that is the period of the freeze through to the period of severe restraint. the living standards of workers in this country dropped by 1.2 per cent., and that if there is any suggestion of the reintroduction of a wage freeze this will just about smash the Labour movement, and the Government with it?

Mr. Shore

I do not accept the figures given by my hon. Friend, or at least I should want to look at them and discuss them with him first. I think that that will do for the answer.

Mr. Whitaker

Would not my right hon. Friend agree that it is impossible to have compulsory wage restraint if the Government will not, or cannot, impose price restraint equally compulsorily, particularly in essential foodstuffs?

Mr. Shore

I think that any policy for incomes and prices has to be seen to cover both incomes and prices. We cannot have one without the other, but I put it to my hon. Friend that, in a period when we have recently devalued, it is impossible to ask for price stability during that period.

Mr. Barnett

While accepting the theoretical economic case for wage legislation, would my right hon. Friend nevertheless agree that the industrial disruption that might be caused by such legislation is more likely to do greater harm than good?

Mr. Shore

I have no doubt that any legislation, should this be required, must also have with it a tremendous measure of consent to be effective.

9. Mr. Gwilym Roberts

asked the Secretary of State for Economic Affairs how many representations about price increases had been received by his Department in recent weeks; what consideration he has given to improving the mechanism for controlling prices as a result of these representations; and if he will make a statement.

38. Mr. William Hamilton

asked the Secretary of State for Economic Affairs what further progress has been made by his Department in securing greater control of price increases.

The Chancellor of the Duchy of Lancaster (Mr. Frederick Lee)

Some 200 representations were received in the first six weeks of this year. As my right hon. Friend has indicated our intention in the post-devaluation situation is to make full use of the existing machinery for the supervision of prices, the effectiveness of which is kept under review, including extension of the arrangements for notification of price increases.

Mr. Roberts

Would not the Minister agree that if the present pattern continues, we shall have a 30 per cent. or more increase in prices before the end of 1968? This will generate increased demand for wages, whatever the C.B.I. may say or the Government may try to do, and push up industrial costs and thus endanger our export position.

Mr. Lee

No, I do not accept my hon. Friend's figures. As my right hon. Friend was saying, the effect of devaluation is bound to come through now on import prices. Perhaps it would interest the House to know that the report of the N.B.P.I. on distributors' margins will be published today and it has some important points to make on this subject.

Mr. Hamilton

Will my right hon. Friend say what the departmental view is on the difference of opinion between the Consumer Council and The Grocer publication on the question of price increases? Can he say what further progress has been made in implementing the suggestion that I made to my right hon. Friend a few weeks ago, namely, following the example being set by the Observer newspaper?

Mr. Lee

My hon. Friend makes an important point in referring to the Consumer Council as distinct from a publication such as The Grocer. For instance, when it recently published the point about 500 price increases, it really covered 26 different commodities. A while ago my right hon. Friend the Minister of Agriculture made it clear that in the case of 118 price increases announced by The Grocer they related to various sizes and varieties of Continental cheeses imported by two firms.

Sir C. Osborne

How can the Government control prices when manufacturers are compelled to pay 17 per cent. more for all the material which they import, because of devaluation?

Mr. Lee

I do not think that the hon. Gentleman has the point. Something which we know and have been saying for some time, of course, is that certain imported ingredients will rise in price. That does not alter the fact that the Gov- ernment can take that essential rise into account and still contain it.

20. Mr. Barnes

asked the Secretary of State for Economic Affairs how many cases of prices being raised without clear justification have been referred to the National Board for Prices and Incomes since devaluation.

Mr. Frederick Lee

The Government do not prejudge the issue in deciding to refer particular price questions to the Board. The purpose of the reference is to have the application of prices and incomes policy to a particular case independently examined. This can be in the national interest even where prima facie there seems good ground for a price increase.

Mr. Barnes

Would my right hon. Friend not agree that the public are clear in their own minds that there has been a large number of seemingly unjustified price increases, which have not been referred to the Board and which the Government have not acted upon'? Is it Government policy to do nothing about these? When will the Government take steps to protect the standard of living of low-income families in work?

Mr. Lee

There have been far more prices references to the Board than incomes references. I have here a list of eight prices references since devaluation whereas there have been only two incomes references.

Mr. Richard Wainwright

Would the right hon. Gentleman agree that, in some respects, it is a good part of the Government's present economic policy, in order to restrain demand, that many prices should be allowed to rise?

Mr. Lee

It may be an economic argument in that respect, but we want each case to be vetted against the criteria which we are using.

Mr. lain Macleod

Is the Chancellor aware that during the current year under Part IV there were 14 orders about wages, one on services for laundries and none at all on prices? Does not this show that the prices policy of the Government is and always has been a sham?

Mr. Lee

No. If the right hon. Gentleman takes increases in prices over the period of this Government in office as against the increases in incomes, he will find that income increases are far higher than the increases in prices, as distinct from what was known as the Selwyn Lloyd squeeze.

Mr. Winnick

Is my right hon. Friend aware that one of the additional reasons why there is such wide-ranging opposition among Labour M.P.s to a wage freeze is the position over prices and that we are totally opposed to a wage freeze?

Mr. Lee

I do not think the Question discusses a wage freeze, but I hope that my hon. Friends will look objectively at prices against incomes for then they will see that that conclusion is a false one.

28. Mr. Edward M. Taylor

asked the Secretary of State for Economic Affairs what estimate he has made of the percentage increase in prices in 1968.

Mr. Shore

I have nothing to add to the reply made by my right hon. Friend the Chancellor of the Exchequer to a Question by the hon. Member for Louth (Sir C. Osborne) on 16th February.—[Vol. 758, c. 433.]

Mr. Taylor

With the increase we are to have how do the Government intend to achieve a reduction in living standards, which the Prime Minister says we must have to make devaluation work, without imposing a statutory wage freeze?

Mr. Shore

My right hon. Friend and I have referred to the cost of the living standard as we see it over the period 1968. I should not like to go beyond what has been said.

30. Mr. Gardner

asked the Secretary of State for Economic Affairs if he will take steps to publicise Government action on prices within the terms of the Prices and Incomes Act.

Mr. Frederick Lee

References to the National Board for Prices and Incomes are publicised at the time and the reports made by the Board are presented to Parliament and published.

Mr. Gardner

Surely my right hon. Friend is aware that most people rightly or wrongly, are under the impression that the Government, while being tough over wages are being very much less tough over the matter of prices? If the record of looking at prices and negotiating with manufacturers and referring increases to the Board is a good one as my right hon. Friend suggested earlier, why is he so coy about it? Why can we not have more publicity about what the Government are actually doing?

Mr. Lee

I do not disagree with the first point made by my hon. Friend that there are impressions to the effect that he stated. My job as I see it today has been to deny that. We use the full powers we have available wherever we believe that prices are being raised out of line with the criteria.

Mr. Higgins

The right hon. Gentleman talks about action but what action are the Government taking to affect any price rises?

Mr. Lee

That is what we have been talking about today. We have asked for prior notification and when prior notification has been given we have argued very successfully that there should be no rise at all. On other occasions when this has not been possible we have referred the matter to the Prices and Incomes Board. I have given the figures of the number of occasions when this has been done. I have also pointed out that the issue of the retail margin will be published today.

31. Mr. Brooks

asked the Secretary of State for Economic Affairs whether, when making orders under the Prices and Incomes Act, he takes into account overtime earnings as an integral part of incomes for the purpose of deciding whether existing wage and salary levels are too low to maintain a reasonable standard of living.

Mr. Frederick Lee

In considering whether a settlement meets the present criteria for pay increases the level of earnings and hours worked and the likely effect of the settlement on these are taken into account in addition to proposed changes in basic rates.

Mr. Brooks

What would happen if municipal busmen decided to stop working overtime? Would they then qualify as lowly paid workers and be awarded the £1 increase granted to them by their employers? Then, if they decided to resume working overtime, would my right hon. Friend stop them doing so on the ground that this would make them too affluent?

Mr. Lee

If my hon. Friend were to study the compilation of busmen's rates he would discover that it is very difficult for them to get as low as the basic rate in the industry because even when they are working a 40-hour week many of them have to work in a period when overtime rates are due to them.

Mr. lain Macleod

How can the Chancellor of the Duchy, or indeed, the Government have a coherent policy in this field until they define what a lower-paid worker is? What is the right hon. Gentleman's definition?

Mr. Lee

We do not know what a strict definition of a lower-paid worker is. This is a question of whether a basic rate is a real rate for the industry. If the right hon. Gentleman would like to discuss with me what I know to be low-paid workers, I can give him a definition of that.