PRICES AND INCOMES

HC Deb 22 July 1968 vol 769 cc150-205

9.1 p.m.

Mr. Terence L. Higgins (Worthing)

I beg to move, That the Prices and Incomes (General Considerations) Order 1968 (S.I., 1968, No. 616), dated 16th April 1968, a copy of which was laid before this House on 22nd April, be withdrawn. It may well be that in debating the Motion the House will experience a sense ofdeja vu, a sense of having been here before, since in many respects it is similar to the Prices and Incomes (General Considerations) Order, 1967, which we debated a year ago. The object both of this Order and of the one which preceded it is in essence to change the prices and incomes criteria against which the Government's policy will be enforced in relation to prices and incomes. That is to say, it alters the criteria which need to be taken into account when it is attempted to justify either a price or a wage increase.

When I look opposite at the Parliamentary Secretary, who, I am glad to learn, is to reply to the debate, I get a sense of nostalgia for the many debates we have had on previous Prices and Incomes Orders, although it is unfortunate that we should have abandoned the procedure which applied to Part IV of the Prices and Incomes Act, 1966. I do not think it is unfortunate that we lost Part IV, but it is unfortunate that the procedure whereby we debated these matters fairly rapidly after they came into effect has been lost, and now, whether it be on an Order affecting a group of workers or a price, instead of being able to debate it fairly rapidly, have to delay for some considerable time. The House will have noticed that some time has elapsed before we have had an opportunity of debating the Order, which is not concerned with a particular case, but with the criteria which shall apply to all the various cases which may arise under the Government's present Act.

A number of points need to be made in general terms. We have always maintained that the compulsory prices and incomes policy is undoubtedly ineffective. It is extremely unfair on certain groups, and at certain stages it tends to be counter-productive. It is, therefore, important that, when we come to consider the Order and the criteria which it embodies, we should look at it in terms of a long-term prices and incomes policy. That is to say, we should not look at it as a temporary expedient, as we have on former occasions, but in the light of a policy which has continued for some years and which is likely to continue for some time yet, on the Government's own admission.

The fact of the matter is that the whole charade, which arose originally when the policy was adopted in a compulsory form, that somehow it was something that we would have to endure only for a short time, and where we had the Prime Minister saying on television that there was no question of further legislation, and so on, has been given up. It is stated clearly in the Government's White Paper that it is proposed to take the powers for 18 months and that these criteria shall now apply possibly for that period and may then be renewed.

It is interesting that the Prime Minister, speaking in a different context on 13th May, said again that they would not be renewed without further legislation. This is very much a case of once bitten twice shy. We do not attach much importance to the Prime Minister's remarks in this respect, because the Government's word has been broken time and time again on whether this policy will or will not be perpetuated. Somehow, they always find a reason for feeling that it is something which ought to be perpetuated time and time again.

I want to turn from that point and look at the criteria in the light of our experience over the last three and a half years, in which time we have passed from the halcyon days of the Declaration of Intent, where everyone was agreeable with the then First Secretary and the Department of Economic Affairs that a prices and incomes policy was a good thing and that we could all agree on the criteria, to a situation where reaction to the whole subject of a prices and incomes policy has grown increasingly antagonistic.

Although paragraph 4 of this Order says that there shall be consultation with the C.B.I. and the T.U.C. and that the Government needs to take account of the various interests involved under the prices and incomes legislation, as they must, the fact is that there has been very little agreement on this policy which the Government are determined to push through come what may.

I turn now to the criteria, and I want to look at them in the light of the fact that the policy is likely to continue for some time, and has already. The temporary criteria are obviously not justified and are likely to have adverse effects if they are perpetuated for a considerable length of time. The Order this year extends the scope of the criteria to dividends, reductions in prices, rents, and awards of wages councils and agricultural wages boards. I wish to make some reference to that extension but, before doing that, I want to consider the basic criteria affecting the main areas of incomes and prices.

It is worth while looking for a moment at the appraisal which one can make of the present policy. I am distressed to find that it is still the case that a number of reputable journals such as theEconomist and other sources of information such as the National Institute for Economic and Social Research still feel that it is wrong to oppose a statutory incomes policy. On a previous occasion, the Parliamentary Secretary has called in aid the National Institute's Review of February of this year, arguing that it said that it would be a good thing to have a statutory incomes policy.

What really happened was strange. The Institute started by saying: If an incomes policy can be devised which is strong enough to reduce the rise in weekly earnings from 6½ to 4½ per cent., there is a strong case for using it. The crucial word is "if". The National Institute then went on to carry out a very thorough analysis in which it concluded that the statutory policy had had very little effect over and above that which might be due to natural forces. It even concluded that the statutory policy had had less effect than the policy adopted by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) on a previous occasion, when statutory powers were not invoked, although undoubtedly a strong line was taken in the public sector. Having reached this conclusion, the National Institute went on to say that none the less it felt that a statutory policy was a good thing and that it even ought to be intensified.

I direct to the Parliamentary Secretary's attention this extraordinary line of thought of the National Institute: first, that it would be a good thing if it could be done; secondly, that it does not work; thirdly, that we ought to have more of it. This is something which needs to be brought out, because it is dangerous that one should have got into the frame of mind where somehow it is fashionable to support a statutory prices and incomes policy.

On the other hand, the Brookings Report on the British Economy, looking particularly at criteria of the kind embodied in the Order, takes a far less optimistic view than that taken by the National Institute and, indeed, increasingly questions whether, as time passes, this kind of policy and the adoption of the kind of criteria which are embodied in the Order do not in fact have an adverse rather than a favourable effect on the general state of the economy and on the ability of the economy to progress and on the ability of the economy to be conducted on an even keel.

It is clear that, apart from the question of investment, which tends to be controlled in other ways, the Order is an attempt to extend the powers and the criteria to almost every aspect of our economic life. This is something which we on this side cannot view with favour. We think that it should be opposed.

The Order alters Schedule II to the 1966 Act, instead of its altering the legislation which was pushed through the House earlier this year. The criteria are, by the Order, incorporated into the parent Act. It is extraordinary that, in relation to a policy which is supposed to be generally comprehensible, which small manufacturers are supposed to understand, and which members of trade unions are supposed to understand, we cannot tell what the position is on any particular price change or wage increase unless we have before us the 1966 Act, the 1967 Act, the 1968 Act, and this Order. This is not a satisfactory way of legislating.

In Committee this year my hon. Friends stressed very strongly that they thought that it was right and proper that the criteria should be incorporated into the current legislation as part of this year's Act. This has not happened. Therefore, this evening we must debate the criteria which will amend the parent Act. There are three main criteria on which I want to concentrate. The first is the quantitative criterion. Under the Order there is to be a 3½ per cent. ceiling, provided that the various qualitative criteria for wage increases are met, but further increases above that 3½ per cent. ceiling are to be allowed in the case of productivity agreements. Secondly, there are the qualitative criteria for wage increases. Thirdly, there are the qualitative criteria for prices. On top of those, there are the various extended criteria to which I have already referred.

This Order, which it is proposed to incorporate into legislation, is a very unsatisfactory piece of drafting. I am not well versed in the technicalities of these matters, but there seems to be a peculiar situation here; we are writing into a parent Act references to matters outside the scope of the Act itself. It is at least arguable, for example, whether references to family allowances and such matters in the Schedule to the Order ought to be incorporated in legislation which did not originally go anywhere near referring to family allowances. The reference to family allowances arises in connection, for example, with lowest-paid workers, but there was no reference to family allowances in the parent Act. That is a technical point which we should look into and, perhaps, return to on a later occasion.

There are other paragraphs taken from the White Paper which now form part of the Order which are no more than platitudinous statements of what the Government hope will happen, without any direct reference to the basic criteria in the Order at all. Moreover, in paragraph 20 we have this sentence: The goods and services to which these arrangements"— that is, the early warning arrangements— currently apply are listed in Part A of Appendix I, and, as announced in Parliament recently, the Government are in consultation with industry on the addition of further items to this list". That is an extraordinary passage in the present context. We are asked to include in a Schedule to an existing Act wording which refers to a recent statement in the House about which the Government may have something to say later. It is bad craftsmanship gone mad, and it arises from the extraordinary way in which the Schedule was originally incorporated in the 1966 Act and the amendments made to it subsequently.

I come now to the criteria. Apparently, we have a nil norm for most sectors of income, but if the qualitative criteria are met one can have up to 3½ per cent., and in the case of what the Prime Minister called copper-bottomed productivity agreements there may be increases allowed above that. What are the qualitative criteria for incomes? They appear on page 7 and can be summarised as the productivity criterion, the mobility criterion, the lowest-paid worker criterion and the "out of line with other workers" or comparability criterion.

The fundamental point here is that none of these criteria makes any allowance for a change in the demand for a particular kind of labour. The Brook-ings Institute pointed out in its study of the United Kingdom economy that, if one concentrates only upon cost questions, without reference to what happens to changes in demand, one will be unlikely to produce a reasonable distri-tion of economic resources. This may be bad enough in the short run, but if the policy is perpetuated year after year, distortion of this kind, which means that one does not allow for a particular industry wanting more labour in one area and less in another, will have greater and greater adverse effects on the economy.

Paragraph 32 presents another innovation, relating the question of national bargains to plant bargains. It says: In considering increases settled at national level account must be taken of probable increases at local, company and plant level; conversely, increases in rates settled at the plan level should take account of relevant increases settled at other levels. I do not need to ask the hon. Gentlemen below the Gangway opposite who have consistently opposed the policy, at any rate in its incomes and wages aspect, "How on earth is anyone at plant level to know what will happen at national level, and how is anyone settling the wage bargain at national level to know what is likely to happen at this or that plant, where a special arrangement about productivity, working hours or whatever it may be is likely to take place? "Such a paragraph shows the complete unreality of the Government's policy and shows how they are divorced from the real way in which bargaining takes place throughout the country. That is only one example.

Similarly, on the question of comparability, paragraph 38 says: The criterion justifying increases on grounds of comparability needs to be applied selectively, and must not be used to spread pay increases into areas of employment where the original justification does not apply. What does that mean? Either there is a case for comparability or there is not. We need to know a little more from the Parliamentary Secretary about applying the criterion selectively.

I turn to what I think are now generally recognised as the two main criteria: the questions of the lowest paid worker and of productivity bargaining. We on this side of the House have always had doubts about whether the answer to our industrial problem is all the time to narrow wage and salary differentials. It has always seemed to us that the right solution to the problem of the lowest paid workers is to get them out of the industries which are lowest paid. This will not necessarily be brought about by the kind of policy the Government advocate.

The last two lines of page 7 state: It will be necessary to ensure that increases under the low pay criterion are confined to low paid workers. One might think that that was a reasonable point of view. One might also think it unnecessary to put that sentence in, but it brings out the point that the Government have never defined what is meant by low paid workers. Quite how we are to interpret this fascinating sentence is likely to remain something of a mystery.

The whole essence of the Government's policy has been the idea that there must be an increase in productivity, and that the policy is likely to bring it about. We on this side of the House had grave doubts about that, and the Prices and Incomes Order on the Birmingham car delivery drivers, which we debated some time ago, gave us good grounds for those doubts. There was then an agreement whereby a car delivery driver not only delivered a car to the docks but took an imported car from there to its destination, or used a season ticket if tha was not possible. As a result of the Government's banging an order on the Birmingham car delivery drivers, productivity went down, and the Government never decided, month in and month out, whether or not it was a genuine productivity agreement, or whether the drivers should have legal action taken against them under the prices and incomes criteria.

It remains the case that paragraph 34(i) does not spell out any of the complexities, nor does Appendix II, based on the National Board for Prices and Incomes guidelines for productivity agreements, give us a sufficient basis for working out the effects of productivity agreements. It does not take account of the question of demand.

On page 7, in particular, emphasis is placed on the need to apply the criteria firmly. It is very important to ask, therefore, whether the Government are applying the criteria in the Order to wage levels in the nationalised industries.

There was a fascinating article in theEconomist on 13th July headed "Wrecked at Penzance." It referred to the recent rail dispute.

The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley)

I am confused about which of theEconomist articles the hon. Gentleman accepts and which he rejects. Can he give the dates of those that he finds unacceptable and the dates of those that he finds acceptable so that we shall understand how he is discriminating about these things?

Mr. Higgins

I am not being the least bit discriminating. I am saying that theEconomist on the whole has tended to support a statutory prices and incomes policy. Whenever it does so, the Opposition are under the impression that it is misguided. This has occurred in a number of articles over the last three years. But from time to time in its enthusiasm for the statutory policy theEconomist rightly gets very annoyed if the Government themselves do not stick to their policy. There is nothing inconsistent in either theEconomist attitude or my attitude. Those who are being inconsistent in this respect are the Government. They bring an Order before us and we debate it, it sets down certain criteria, and the Government are not sticking to them. I should have thought that it was a perfectly reasonable attitude for me or theEconomist to adopt.

At all events, in an article on 13th July theEconomist says: It is now apparent that both British Rail and ministers were making promises to the nation which they had not got the resolution to keep. It goes on even this week, even after the pass had been sold, the Minister of Transport, Mr. Richard Marsh, was telling the Commons that the Government had not intervened in the dispute, that the surrender at Penzance was in accord with the incomes policy, and that it will not involve the Government in eventually handing out even more financial help to the railways. It will be serious if Mr. Marsh, who is really a serious Minister, has anaethetised himself into believing his own canards. Let each of these statements therefore be most specifically contradicted. It goes on—it is concerned with the criteria in this matter—to say: Mr. Marsh professes confidence that the unions are anxious to sign a productivity agreement". But the fact is that the arrangements have been made without the productivity deal being concluded. If there is one thing that we have been told time and time again it is that the Government policy is that it is no good saying that one is going to have a productivity agreement; it is a question of whether one has actually got it, and if not, one cannot get a wage increase—unless it is a nationalised industry.

Mr. J. J. Mendelson (Penistone)

The hon. Gentleman must make clear to the House whether he, on behalf of the Conservative Opposition, is objecting to the policy being broken and punctured or to the policy itself. He cannot be arguing both cases at the same time.

Mr. Higgins

The hon. Gentleman always makes interventions of this kind and poses questions of the type "Have you stopped beating your wife? I do not accept this. I do not think there is anything inconsistent in my attitude or the attitude of theEconomist.

I quote one short passage more: Last weekend thus spread the impression to the world that the Government does not believe in its own incomes policy (or, as far as Mrs. Castle and Mr. Marsh are concerned, apparently even understand what it is). On this side of the House we have always regarded the statutory policy as one which is in many ways simply a gimmick —I shall return to that in a few moments —whether or not it has any quantitative effect on the economy.

With regard to prices, there has been no allowance in the criteria in the Order for what happens with regard to demand for particular goods or services. If the policy is to go on year in year out without taking account of changes in demand and consumer preferences, the distortions that one brings into the economy and the ways in which one freezes the pattern of production are likely to be very much greater.

I refer briefly to what I can only describe as the Government's post-devaluation schizophrenia, the way in which the Government have fallen between saying, on the one hand, "We must let prices rise because this will cut down demand and release resources for export," and, on the other hand "Whatever happens, we must not have any increases in prices because it will affect the cost of living."

I was amused by a statement of the Secretary of State for Employment and Productivity last weekend, when she said that we must not go back to the position we had a little while ago in which we could not keep prices down but incomes went up and then we had a situation in which imports were sucked in. This statement was originally made some years ago by one of my right hon. Friends. This point has finally got over to the Secretary of State, for which I am very grateful. But the Government are still adopting the attitude which came out clearly in an answer which the right hon. Lady gave to a supplementary question a few weeks ago on the question of devaluation. The Government are now saying that if the costs of imports and raw materials have gone up because of devaluation, price increases are justified. But if we ask what the situation is concerning price increases by a domestic producer of the same goods, the right hon. Lady says that in no circumstances could devaluation be allowed to justify a price increase.

But if we allow imported goods to go up in price and, therefore, the demand for the goods of the domestic producer increases, this surely justifies an increase in the price of the goods of the domestic producer. If we do not allow that to happen, in the short run profitability and investment does not go up in import-substitute-producing industries and, therefore, we do not get in the long run either the import substitution effect or the long run reduction in prices which is justified. I therefore hope that the Minister appreciates that account needs to be taken of that point in relation to the producer of import substitutes. But certainly there is no allowance for this in the Order.

I wish to relate this to the public sector. While there is a series of criteria set out in the Order, there is no clear indication of whether the Government are adopting the same criteria for the nationalised industries. Many of us will have received in the post this morning a notification of the new inland letter service and the changes to be made in postal rates which effectively make a considerable increase in the costs of postal services. Although we are told that the service will not be any worse, we shall have to pay 5d. instead of 4d.—[Interruption.]—and my hon. Friend may well be right in saying, "Thank goodness for that." This amounts to a substantial increase in price quite outside the criteria set down in the White Paper, which limits increases to 3½ per cent.

The same is true about the extraordinary procedure concerning telephone charges in which the simpler system has been adopted of blanking off the bottom line of the slot machine. But, whether one considers telephone and postal charges or electricity and gas prices, the fact remains that the Government are asking us to adopt a set of criteria for price increases which they do not rigorously apply, despite the fact that they are trying to keep down incomes and are saying that the position is such that they should be firmly applied across the board.

I wish to say a few words about the quantitative effect of these criteria and to refer particularly to an interesting statement of the Under-Secretary of State during the Third Reading of the Prices and Incomes Bill on 27th June. He said, when referring to the effect which we might expect of the Government's compulsory policy: … during the next 18 months effective demand may be held back by 1, 1½ or 2 per cent. … Its outcome will, perhaps, be a reduction of effective demand of about £200 million. We accept that that is the hon. Gentleman's view, and, one presumes, the view of the Government, though the Chancellor of the Exchequer has always refused to say what allowance he made in his Budget calculations for the effect of the Prices and Incomes policy. It was therefore interesting to hear that statement, and I shall be fascinated to hear whether the hon. Gentleman repeats it, and whether he can confirm that the Chancellor made that interesting quantitative allowance when he made his Budget judgment. The extraordinary thing is that the hon. Gentleman went on to say: To me and, I believe, to many of my right hon. Friends, this"— that is the Statutory incomes policy— is a far more pallatable way of doing it"— that is capital aggregate demand— than any of the other measures."—[OFFICIAL REPORT, 27th June, 1968; Vol. 767, c. 894–5.] which the Government are taking.

The fact is that not only are we saddled with this prices and incomes policy, but with the other measures, and we on this side of the House have grave doubts about the effectiveness of this policy. We believe that the criteria in this Order, if taken over a long period, will have an adverse, and not a favourable effect on the economy as a whole. Given that that is so, and given that perhaps the policy will seem to work because of the high level of unemployment that we have, none the less the policy is a failure. We believe that it ought to be condemned, and we shall register our opposition in the Lobby this evening.

9.37 p.m.

Mr. Trevor Park (Derbyshire, South-East)

The purpose of the Order which is being prayed against is to lay down terms of reference as guidelines for the Prices and Incomes Board when it considers matters referred to it by Government Departments. It is not my wish unduly to take up the time of the House. Many hon. Members wish to take part in the debate, and I shall therefore confine myself to Section III of the White Paper which deals with incomes, and I shall hope to show why I believe that this section, whatever one may think of other sections, constitutes a totally inadequate and potentially dangerous way of attempting to implement an incomes policy.

By laying down an arbitrary ceiling of 3½ per cent. on increases in incomes, and by declaring that increases even below that ceiling shall be subject to rigid and inflexible control, the Government are denying both to themselves and to the Prices and Incomes Board any degree of discretion, any quality of adaptability, and any bargaining initiative. One reason why the conciliation facilities of the old Ministry of Labour were so highly regarded on both sides of industry was precisely because that Ministry was able to deploy qualities of that kind. Because its hands were not tied by detailed frameworks of reference, it was able to suggest to the parties to a dispute new lines of approach and new ways of looking at the question in issue.

In doing so it could very often point the way to a settlement whereby industrial strife could be avoided and both parties could feel that their case had been partly, if not completely met. These are the very facilities which the Department of Employment and Productivity is now throwing away and, instead of acting as a mediator, my right hon. Friend the First Secretary prefers the rôle of a participant. Instead of producing a formula for the settlement of disputes she is now going to take the risk of inflaming and intensifying them by insisting that all agreements shall be consistent with an arbitrary framework which she claims the sole right not only to lay down but to interpret.

If this policy were carried to its logical conclusion every industrial dispute could become a political one and every strike a strike not against the employer but against the Government. Is that really what the Government want? It might not be their intention but there is no doubt that this will be the effect.

I want to give one example of my case—the example of the municipal busmen. Last week the municipal busmen and their employers had reached an agreement which was satisfactory to both sides. It was rejected by the Government because the Department took the view that the agreement failed to conform to the criteria laid down in the White Paper. As a result we are now confronted with the imminent danger of a national bus strike, with all its consequences in terms of inconvenience to the public and loss of production and wealth to the nation. I profoundly hope that there is still time to prevent that strike taking place, but if it does take place the busmen, their employers and the public generally will be in no doubt what has caused it. The Government will have blocked the agreement, and the Government will get the blame.

I suggest that where, as in the case of the municipal busmen, there is a group of workers whose basic rates are below £13 a week and whose take-home pay is brought above this only by means of overtime or rest day working, and where the workers have been subject to standstill Orders under the Prices and Incomes Acts not once but three times in the last two years, there is a case for specially favourable treatment under the Government's incomes policy. Instead, the Government choose to make the busmen their major victims.

Earlier this year, in Liverpool, there took place one of the longest passenger transport strikes that has ever taken place. It was caused by the Government's policy. At the same time that the dispute was taking place increases in wages for dockers and tugboat men involving not the £1 of the busmen's claim but amounts of about £3 10s. a week were agreed upon with their employers. There was no reference to the Prices and Incomes Board in respect of the dockers and tugboat men, and there was no standstill under the Prices and Incomes Acts.

It is no part of my case to suggest that these increases were not deserved; I believe that they were. But I maintain that after the Prices and Incomes Board had ruled against the municipal busmen's claim on the ground that they were not lower-paid workers the logic of the Government in making no reference in the case of much bigger increases for workers already on higher rates makes no sense whatsoever.

Its only possible explanation lies in the need for all settlements to conform with such a rigid, contradictory and inconsistent set of criteria that at the end of it all those whom we are told are intended to be the chief beneficiaries of the incomes policy are held up and those who are already in a stronger position are given the green light.

It is for these reasons that I cannot support the Order. If the Government really want the incomes policy to succeed, and if they want to recruit the support of the trade unions to work out some system of priorities in wage bargaining and the distribution of the social product, the best thing that they can do with the White Paper is not to refer it to the Prices and Incomes Board, but to tear it up, and to make a new start on the basis of voluntary discussion and agreement. In the end, this will be a position which the Government will be compelled to accept. I hope that they will have the common sense to accept it now, before the bitterness and the disillusion which has already begun is allowed to extend any further.

9.46 p.m.

Mr. John Biffen (Oswestry)

We are debating this evening a major instrument of Government economic policy and I know that the Under-Secretary will be anxious to cover the many questions which are sure to arise. I have little to say, but it will be in the form of two questions about two paragraphs in the White Paper, as well as two general philosophical observations with which I will not expect him to agree. I will not feel particularly affronted if he chooses to disregard them, provided he can deal with all the specific questions which will come from both sides of the House.

The first point about the White Paper which interested me particularly, especially relating it to the now pending series of wage negotiations, was the remark in paragraph 37: Moreover there can be above-ceiling increases for low paid workers under a settlement which, though covering a wider group of workers, is within the ceiling. A fair interpretation of that is that the move towards equal pay in the engineering industry between men and women, which we now see accelerating, is, presumably, regarded by the Government as coming within the disciplines of that paragraph.

It is important that we should know this, because it means that the move towards equal pay presumably comes within the category of increases of up to 3½ per cent. Inasmuch as they are redistributed, it will be within that discipline of 3½ per cent., to the advantage of women and the disadvantage of men. In other words, the move towards equal pay will have to be made at the expense of men's rates and earnings within that discipline. I should like confirmation on that point.

Second, I refer to paragraph 32, which is particularly interesting in relation to the national engineering settlement—[An HON. MEMBER: "It is nowhere near a settlement."]—No, I agree; it is nowhere near a settlement, and it will not facilitate a settlement if we get a specific answer from the Under-Secretary, but all those who will negotiate that settlement will want this question clearly and decisively answered, so that the engineering claim is not subject to last-minute Government intervention, with all the bitterness which that might occasion.

Paragraph 32 says: Changes in rates or scales may be settled at national, local, firm or plant level, but … the application of the ceiling requires that the overall increases should not exceed the 3½ per cent. ceiling. The present national negotiation in the engineering industry clearly foreshadows a series of local plant settlements to follow. Indeed, I am certain that the experience of many hon. Members on both sides would suggest that this is inevitable. Many people would say that it is particularly welcome.

Have the Government any idea of the extent to which they see the 3½ per cent. being pre-empted by the national negotiations and how much is to be left for application to local settlements? They must know from past experience of engineering awards what are the consequences of a national settlement and what are the local implications. The Undersecretary must make it clear, if only for those who have to conduct national negotiations, the extent to which they feel that the 3½ per cent. has to be reduced to take account of the local settlements which they think will follow from the national agreement, when it is negotiated.

May I turn to two general philosophic speculations about the White Paper and the policy? The political manipulation of incomes is a highly unpopular system, as the Under-Secretary finds whenever it is debated and as he is always reminded by hon. Members behind him. As a result of this, the Government are obliged to engage in what I regard as something not very moral—almost near-bucket-shop salesmanship for this policy.

Mr. Stanley Henig (Lancaster)

Oh.

Mr. Biffen

I know that the hon. Member for Lancaster (Mr. Henig) would not know a bucket shop if he saw one.

I am thinking in particular of the claim that this policy promotes the interests of lower-paid workers. There is, again, a reference to that in paragraph 8 of the White Paper which says that There must be protection for the poorer sections of the community". It is often asserted by the Government that this policy of Government intervention results in relative improvements in pay for those who are at the lower end of the incomes scale. The hon. Member for Derbyshire, South-East (Mr. Park) is rightly sceptical of that claim.

I was particularly interested the other day to read an article which appeared in the Poverty Action Group Magazine by Mr. John Hughes, of Ruskin College, Oxford, who discussed "Low Pay and Incomes Policy". That was the title of his article. I will quote only his conclusions. Doubtless the Under-Secretary is aware of the body of the argument. He concluded: If incomes policy is viewed, as it should be, in its combination with other Government economic policies bearing upon the position of the low paid worker, the balance that results from the last three years in an adverse one for the low paid. That is not the judgment of Aims of Industry but of someone from Ruskin College and it is an argument which deserves some attention from the Undersecretary.

The second point of philosophic observation which I want to make concerns paragraph 43 and the idea that productivity is the one way whereby one can escape from the squirrel's cage of this policy and the disciplines which it involves. Let us for one moment enter the temple of the high priest himself—Mr. Aubrey Jones and the National Board for Prices and Incomes. This becomes a test case. Only recently my hon. Friend the Member for Woking (Mr. Onslow) by dint of Questions, discovered that the National Board for Prices and Incomes was paying 8 per cent. more for secretarial hired people than a year ago. Secretarial rates of pay have been referred to the Board. They know all about it. But they are still paying 8 per cent. more. One is troubled by this. There are 40 per cent. more of them employed besides the Board paying 8 per cent. more per employee. Is this policy justified by the productivity of the National Board for Prices and Incomes? How do we judge the Board's productivity? Is it by the number of reports— the mere counting of words? No, it is not such an unskilled exercise as that. I assume that it is the quality of the reports.

We do not know much about the quality of the P.I.B. reports. Certainly they receive astringent comment from people who are often in a position to judge; namely, those who know a great deal more about the subjects under inquiry than Mr. Aubrey Jones and his staff. However, we have no idea how much work has gone into each report, how much has been paid to the consultants who are hired to produce them, and so on. There is no way in which we can test the productivity of the P.I.B.. although we know that its staff has increased, as has the pay of its staff, on a scale which must make the busmen envious.

Although I choose this rather piquant example of productivity at work, we know of the difficulties that there are in the service industries to measure productivity and how the so-called arguments for productivity become more difficult to justify particularly for those in low-paid employment—hospitals and so on—compared with those employed in manufacturing industry. This makes one sceptical of the way in which the word "productivity" is tossed around in such specific terms as though it has the language of being watertight, copper-bottomed and stringently tested. The Chancellor must know every qualification of productivity by heart. Hardly a weekend goes by without a Ministerial statement saying that there must be genuine productivity. Where is the genuine productivity in the work of Mr. Aubrey Jones and his staff?

The opening paragraph of the White Paper says: We now have a real basis for putting our balance of payments into substantial surplus. Presumably, a real basis exists because the exchange rate has been altered. The Government have been driven to recognise the price mechanism, but they are unwilling to accept the implications of a price mechanism, which is to allow it to operate freely in the domestic market, which is the one sure way of making certain that devaluation works.

9.58 p.m.

Mr. Stanley Orme (Salford, West)

As has been said, this Order writes the White Paper into what one might describe as the folk law of the prices and incomes policies to have been mounted since the original Measure of 1966. This is, in a way, an extremely important item, because it will be used as the background criteria on which the Government will either submit a case to the P.I.B. or hold up a settlement. This is, therefore, the criteria which will cover prices, charges, incomes, rents, rates and all other issues.

It is surprising to note that, while paragraph 34 of the Instrument contains the criteria by which increases may be allowed—virtually anything could get through this criteria; one could justify almost any case, including those which are at present being stopped—paragraph 27 deals with restraints and is more rigid. It concludes by saying: In addition the Government have decided that for all wage and salary settlements reached on or after 20th March, 1968, which satisfy these criteria and considerations, there will be a ceiling of 3½ per cent.

It being Ten o'clock, the debate stood, adjourned.

Ordered, That the Proceedings on the Motion relating to Prices and Incomes may be entered upon and proceeded with at this day's Sitting at any hour during a period of one and a half hours after Ten o'clock, though opposed.—[Mr. Hattersley.]

Question again proposed.

Mr. Orme

In the Act that we passed a short time ago no norm was mentioned at all. In the Second Reading debate on the Prices and Incomes Bill my right hon. Friend the Secretary of State for Employment and Productivity said: … there is no mention in the Bill of the ceiling itself—the famous 3½ per cent.—or of the criteria spelt out in the White Paper which set the framework for the whole policy. There is no sinister significance in this—no weakening on any aspect of the policy. In fact, the criteria are already operating. In accordance with normal practice I have already used my power under Section 4 of the 1966 Act … ". —[OFFICIAL REPORT, 21st May, 1968; Vol. 765, c. 313.] That is pretty clear. Many people felt when the criteria did not appear in the Bill that the Government had dropped them between the issue of the White Paper and the presentation of the Bill, but this is not so. Some people believed that, but I never did. I have always considered the 3½ per cent. to be included.

On the aspect of which claims can be allowed, everyone on this side knows that daily and weekly in industry settlements are being made in all types of industry, and because of the vastness of the subject and the impossibility of setting up all the paraphernalia and machinery one cannot follow all that is going on in the industrial life of our present complicated mixed economy. In consequence, thousands, indeed millions, of workers go on unheeded and unimpeded by this policy, but when the Government think it suitable from their point of view to put the brake on any increase, they implement the policy. As has been said, they have done that in relation to the municipal busmen.

They started in the same way in relation to the railwaymen, which was in itself an extremely interesting case. The hon. Member for Worthing (Mr. Higgins) raised this case, but he did not say that at the time when it was referred to in the House and many of us on this side were pressing for a settlement we got no support from that side of the House in relation to the lower paid workers in the railway industry. In fact, hon. Members on this side below the Gangway were very much lone voices in fighting for a settlement.

It is interesting to read in connection with the railwaymen's settlement what is said in the paragraph 37 of the White Paper: It will be necessary to ensure that increases under the low paid criterion are confined to low paid workers. As my right hon. Friend the Member for Belper (Mr. George Brown) pointed out so pertinently in the House, a hole was blown in that one. Further, a settlement was arrived at without the copper-bottomed productivity agreement about which we have heard so much, although it is assumed that an agreement will be arrived at by 2nd September. There is no guarantee of that. In consequence, that breaches the policy in relation to the lower paid worker, the norm granted to the higher-paid worker and the productivity basis. This sort of thing makes nonsense. Paragraph 34 is gobbledegook. It does not make sense.

The Government are trying to base the case relating to municipal busmen on a productivity agreement. A constituent wrote to me a week or two ago drawing my attention to a £1 a week rise which was agreed last December for provincial busmen and was frozen until 26th July. I received a reply from my hon. Friend the Parliamentary Secretary today in which he draws attention to the fact that not only has the rise been frozen until 26th July but that it is extended until the end of the year.

The basis for this is apparently that the productivity agreement cannot be reached, and although the employers and the unions agreed on the settlement last December, they cannot find ways and means of paying the increase. This is absolutely ironic. I have never known a case before in which employers and unions agreed and the amount could not be paid. The chairman of the transport committee of my local authority, who is not a member of the Labour Party, said last weekend that he was prepared to go to prison to see that the busmen of Salford are paid the increase.

This becomes a political issue. It is no longer an industrial issue. As so many of us said on Second Reading, we find the Government are at the centre of every price increase and every wage increase whether it is settled amicably or not. This is a ludicrous position. What effect does this have upon the economy? What effect will it have in future? We have the railway agreement and the busmen's issue and an interlude when Mr. Hambro gets an increase as chairman of one of the national banks. All these issues are before us and we find that the Department of Employment and Productivity is not just playing its rôle as mediator but actually coming down into the market place of negotiations. That is a pretty rough place. I would not doubt that my right hon. Friend can take care of herself, but will this achieve the economic objective which the Government want and the working people demand? I do not think it will. All this talk of a threat of statutory powers is complete nonsensical rubbish. If the municipal busmen, in contradiction of this Order, take industrial action, what are the Labour Government to do about it?

Mr. James Hamilton (Bothwell)

I am following the argument of my hon. Friend closely and agree with many of the statements he has made. Can he tell me how busmen who are prepared to operate a productivity agreement put to them by my right hon. Friend can do so when they have not the buses to operate it?

Mr. Speaker

Order. We cannot discuss the problem of the busmen in detail except as it applies to the criteria laid down here.

Mr. Orme

I recognise the problem and I am trying to keep within the terms of the criteria and the productivity agreement which the Ministry wants to make. In the City of Salford we neither have one-man buses nor are there any on order. How we can implement that part of it, I do not know. I think he sees the point I am making.

Many of my hon. Friends want to speak on this matter and I do not wish to detain the House. We started the Session with this subject and we end with it. I want to see the end of this approach of the Government. It has been proved by the trade unions and by the people of this country that this policy will not work in the present economy and in the type of society that exists. It is backed by powers which could be used but which many people do not believe ever will be used. Nevertheless, the powers are there, and they are punitive powers. I think it is time that this policy once and for all was dropped. The writing of those criteria into the Prices and Incomes Acts of 1966, 1967 and 1968 will not help to bring a rational economic policy to the country. It will only confuse the issue and add problems that we on this side of the House want to see the back of.

Mr. Speaker

I remind the House that many hon. Members wish to speak, and that this debate will finish at 11.30 p.m.

10.11 p.m.

Mr. David Howell (Guildford)

I will give three reasons picked at random why my hon. Friends and I believe that the Prices and Incomes (General Considerations) Order should be withdrawn.

The first reason is that it is a bad and peculiar way of legislating. The Schedule comes of a long lineage. It is almost like a slide being put into a projector, shown on a screen and then, as soon as people have seen it, another one being shown. The hon. Gentleman the Member for Salford, West (Mr. Orme) spoke of the criteria providing the background against which the policy is supposed to be carried out. It is a changing background, rather like a rifle range, where the characters are constantly moving across the scene. It produces not clarity of thought but muddled understanding of what it is all about.

The people of this country would not so much mind a coherent and firm line of economic strategy, but they detest this muddled and constantly changing framework, which is made of elastic rather than of steel, within which they are supposed to act. That is my first reason for believing that this is a bad way of bringing about the aims which the Government seek to achieve. It is an extremely poor and dangerous way of legislating.

The second reason why I support so strongly our proposal that the Order be withdrawn is that it is based on out-of-date economics. The right hon. Lady the Secretary of State for Employment and Productivity said in Committee on the Prices and Incomes Bill this year that all advanced thinking was on the side of the kind of ecenomics contained in the criteria. When one reads the criteria it is hard to understand what that advanced thinking must involve—the thinking perhaps of people who are advanced in age, but not, I am afraid, advanced in the understanding of economics. As hon. Members have pointed out, the White Paper is riddled with economic fallacies. There is a query about the famous first paragraph of which my hon. Friend the Member for Oswestry (Mr. Biffen) has already quoted the first line, but there is an even bigger query on the third line.

We are told that these criteria will give us an opportunity for the economy to sustain a faster rate of growth and a higher level of employment than was possible before devaluation. That is a pretty bizarre claim in the light of present trends.

However, that is only one aspect. Throughout, there is the "must" of the kind of macro-economics of Cambridge in the late 1950s, whence, I suspect, much of this thinking comes, in which it is suggested that the economy must be managed by a transfer of resources from home consumption to producing goods for export and import saving. There is the belief throughout that the economy can be moved round as if it comprised a series of blocks and they were being pushed here and there by magic hands in Whitehall. However, that is not how a modern economy operates, and that kind of approach will not produce results.

Then there is the tedious and almost hilarious contradiction over prices and the insistence that unjustifiable price increases will be prevented. We have the introduction of this curious concept of the "justified" price, that some prices are justified and some are not. We have the complete dismissal of the fact that any housewife faced with price increases engineered by Government tax increases and following from devaluation will not accept that price increases of such an amount will be justfiable and that anything above will not be. These are consequential increases and forces acting on each other which put up prices or reduce the quality of goods while maintaining their price right across the economy. The Government are living in a fool's paradise if they imagine that they can hold a price to a "justified" level of increase and that everything above that will be stopped. There again, the economics are out of date or even non-operative.

There is very much of this attitude and belief that the economy can be pushed around like coloured liquids in a child's chemistry set. That may have been the view of economics eight or nine years ago, but, since then, there has been a vast increase in the knowledge of how the economy works and important developments in the technique of economic management.

Above all, it ignores splendidly and heroically the whole question of the public sector and Government spending. It seems to believe that the aims of holding down wages and prices can be achieved against the background of a growth of public expenditure which is chaotic. I think that the Chief Secretary to the Treasury must be the last man in the land to believe that public expenditure is under control and on target. It is not and, as long as it is not, the arguments in the White Paper will not work.

Perhaps most important of all, there is the fundamental fallacy and what might almost be termed the obsession about wages. However, any comparison of wages and hourly earnings in this country with those in other countries is an unfavourable one. Wage levels in this country are not excessive, and our problems will not be solved by hitting wages. In fact, it is not an economic proposition but a political obsession of an undesirable kind.

My third reason for objecting to the Order is that it is so hypocritical. It is dressed up in the proposition that it is something to do with social justice, yet it has been shown time and time again that there is very little social justice in it. We read in paragraph 48 a desperate attempt to pretend that the legislation should apply not merely to workers in firms employing over 100 men but to everyone. How is it proposed to include everyone?

We have heard the proposition put forward about proposed settlements which might be significant and that these are the ones to be covered. But, I ask, significant to whom? Who is to report whom? Who is to register that this kind of claim for certain people or firms employing under 100 should be reported? It is left in thin air. For the vast majority of workpeople—18 million out of 24 million; that is, all except the 6 million in firms employing over 100— there is a vagueness as to their position under the policy. This is one good reason why there is litle justification for the claim that this stands on a basis of social justice.

Secondly, it makes great play of the restraint on dividends, which hon. Members opposite think is a valuable part of the policy. It did not need the arguments which were advanced in Committee to show that dividend restraint is a very hollow thing. It has its effects, and will have its effects, in distorting the capital market and in driving people to other ways of organising their affairs, but as a device for achieving social justice it does not get off the ground.

There are the other mentions in the criteria about the whole field of wage restraint, where again hon. Members opposite think that a great blow is being struck for social justice. However, the main effect of rent restraint is in its application to council house tenants. That would be tolerable if it were still a fact, which it is not, that the poorer section of the community live in council houses. That was a wonderful and no doubt justified belief of the 1950s. It is no longer so. There is evidence to show that the end result of restraining rises in council house rents is that the ratepayers pay; and the ratepayers include many people with lower incomes than those living in council houses. So there is no social justice there, either.

It may seem odd that I am worried because there is no justice in the Order. In fact I am not worried. It does not surprise me. I am not even sure that I am full of regret, because many of us on this side do not believe that this obsession with equality of treatment— with sameness of condition—is a legitimate or attainable aim of Government. What we fear are the consequences when a Government perform this hypocritical role, when they promise what they cannot provide, when they use language about ideals which they are not attaining by their actions. We do not care if the Government destroy themselves by pushing through this silly Order, but if in doing so they erode and weaken our institutions, if they bring our politicians and the House into disrepute, we cannot stand back.

10.17 p.m.

Mr. Maurice Edelman (Coventry, North)

It was rather unseemly of the hon. Member for Guildford (Mr. David Howell) to accuse the Government of hypocrisy in the matter of the wages and incomes policy. If ever there were a case of hypocrisy, it is in the attitude of hon. Members opposite, because, whereas they want to enjoy the benefits of a wages and incomes policy, they are not prepared to accept the responsibility.

It is clear that those hon. Members opposite who accept the principle of a wages and incomes policy, as I do, though not necessarily wholly in the form presented by the Government, must equally be prepared to accept that criteria are an inevitable concomitant of such a policy. Merely to dismiss these general considerations as if they are irrelevant to the theme of a wages and incomes policy is to seek to have the best of both worlds in a profoundly hypocritical form.

I say that it is necessary to have criteria, but if criteria are to be effective they must be precise. Nothing can be more disastrous than imprecision in the criteria which are related to a policy of this kind.

The question on which I shall concentrate tonight is: what is a low-paid worker? There is no guidance in the White Paper which is worthy of acceptance. Paragraph 34 provides: for increases in the following circumstances … (iii) where there is general recognition that existing wage and salary levels are too low to maintain a reasonable standard of living". It was on that vague and indeterminate statement that the National Board for Prices and Incomes came to its conclusions about the municipal busmen. What was the ruling of the Prices and Incomes Board? It said that the busmen were not low-paid workers because their average earnings were £20 9s. 6d. for conductors and £22 5s. 9d. for drivers. But those earnings are achieved by busmen only by working disgracefully long hours.

The basic rate for a top bus driver is £12 17s. a week. The balance comes from overtime, from working rest days— and working rest days, be it noted, in a way which has been condemned and against which it has been sought to legislate through the Transport Bill. Plainly, the so-called 40-hour week for busmen is a complete illusion. The earnings which busmen have achieved have been achieved by what one can only call sweated labour. They can bring themselves up to the figures given by the Prices and Incomes Boad only by working fantastically long hours.

Moreover—these figures may surprise the House—20 per cent. of the platform staff among municipal busmen are today working up to 60 hours a week. It is a disgrace to a country such as ours in modern rimes that men have to work up to 60 hours a week in order to escape from the arbitrary category of low-paid workers laid down by the Prices and Incomes Board, following the criteria in the White Paper.

In addition, municipal bus workers—I give this in further illustration of the way the criteria operate—have to work 8½ hours extra a week in order to earn the national average for all industry.

Mr. Speaker

Order. I remind the hon. Gentleman that we cannot discuss the problem of the busmen in detail on this Order, which raises the question of criteria.

Mr. Edelman

With the greatest respect, Mr. Speaker, I am arguing that, in order to establish what is a low-paid worker, it is important to examine the way in which a worker's earnings are achieved. In the case of the bus worker, only through such an analysis can one examine and judge the criteria laid down in the White Paper. I respect your Ruling, but I hope that you will allow me to pursue the illustration for a moment or two. I think that it will add to the instruction of those who are concerned to consider the value of the White Paper.

Bus workers work almost the longest hours for about the lowest hourly pay. That being so, as they work for the lowest hourly pay, the Prices and Incomes Board must have been wrong in rejecting their claim on the basis that they are not low-paid workers.

I come now to another criterion for assessing whether an increase should be allowed. This is paragraph 34(ii): where it is essential in the national interest to secure a change in the distribution of manpower (or to prevent a change which would otherwise take place) and a pay increase would be both necessary and effective for this purpose. A quarter of the municipal bus undertakings in this country are 20 per cent. short of staff. If it is necessary to raise the wages of such men in order to correct that drift, as envisaged in the White Paper, this, surely, is a striking case in which action should be taken.

I conclude with this appeal to my right hon. Friend the Secretary of State for Employment and Productivity, in her absence. In the past few days, I have wondered what the late Ernie Bevin would have said about some of the criteria in the White Paper had he been acting for some of the low-paid workers. We all know the regard in which he held my right hon. Friend the Secretary of State, but I cannot help feeling that, had he been alive today and were he acting as counsel for the busmen or any other low-paid workers, his retort to my right hon. Friend's rejection of the wage claim would be, "I am not having it". There will be many today who will react in the same way to the interpretation of the criteria in the White Paper.

I said at the beginning that the only sin in determining criteria in a matter of this kind is vagueness. The paragraph dealing with low-paid workers can only have a subjective interpretation, which I believe in the present context of the busmen is completely invalid. There are objective means in which the criteria can be assessed. I suggest that by those objective methods of assessing the busmen's rate of pay the application of the criteria as expressed in the White Paper stands condemned, and I hope that the Minister will be flexible, will think again, and in that way avert a national strike which would be damaging to everyone concerned.

10.30 p.m.

Mr. Peter Emery (Honiton)

I remind the hon. Member for Coventry, North (Mr. Edelman) that during the debate in Committee on the Prices and Incomes Act on part of the criteria a number of questions were more than once put to the Government on whether the criteria and the Bill were being rushed through in order to catch the busmen. We were given assurances that that was not so. Perhaps they were meant then, but it is interesting that one of the first actions under the new Act is, as the hon. Member for Poplar (Mr. Mikardo) and a number of other hon. Members suggested in Committee would be the case, that the criteria and the Bill were used against the busmen. Note should be taken of the Government's double-dealing on that.

I wish to speak particularly about the criteria because I tried very hard to rewrite them. I tried to make quite clear exactly what they meant without all the Government double-talk. It seemed to me that their whole basis was that the Government were saying, as is clearly the real interpretation of paragraph 1 of the Schedule to the Order, "There is only a slight chance of our putting our balance of payments into a substantial balance under the present Government and of repaying our debts, and it has been made more difficult by the policy we have pursued in the past".

The interesting thing about these criteria is that this is the fourth lot the House has had to consider; this is the fourth Order altering the way in which the prices and incomes policy has to operate. On each occasion the Government have said, "This is all that is necessary". The country were assured that once this aspect of the prices and incomes policy was put into operation the whole purpose which the Government had been struggling to achieve for years and years would be brought to success.

The way in which the Government are pursuing the present prices and incomes policy is like a geometric progression, because at each turn, with more and more controls, it is necessary not to duplicate controls to stop up the holes that they happen to have made in their past policy but to quadruple them. The length and extent of the Government's criteria show that this is a geometric progression both in their length and the powers taken.

My hon. Friend the Member for Worthing (Mr. Higgins) gave an illustration of comparability in regard to paragraph 38 of the criteria. He asked what it meant. It means that consideration of arguments for wage increases should not necessarily include the ground of comparability. But it does not say so. This is the point about the document. The Government are not being fair to the workers, the people who are having to bargain or the employers. They mean a great deal more than the words they use in the document. They are implying much greater stringency than the words that they publish. They are suggesting that there shall be a nil norm and that there shall not be comparability.

Two hon. Members opposite asked for the interpretation of paragraph 34. It means that if one works harder one might get an increase. That is all. What happens about persons who ought not to be producing more and ought not to have greater productivity? How does the man who ought not to be having greater productivity get a wage increase? I refer to the man working on quality and reliability inspections. One does not want him to turn out any greater inspections. If he is doing that, he is not doing the job properly. What about a safety engineer, who ought to be doing only what he can do and what he is set to do in any given time? [HON. MEMBERS: "Rubbish."] Hon. Members opposite may laugh about it and say "Rubbish", but they do not know much about industry.

Mr. Robert Sheldon (Ashton-under-Lyne)

rose—

Mr. Emery

Sit down for a moment. Many accusations are made—[Interruption.]

Mr. Speaker

Order. Let us get back to our calm and placid debate.

Mr. Emery

I am only too delighted to do so, Mr. Speaker. If some hon. Members suggest that I have not done a day's work, my first job in life was in a labour gang with a pick and shovel, which is more than can be said of the hon. Gentleman opposite. So perhaps he will be quiet.

There are a number of jobs in industry where it would be wrong for any cost and works accountant or any other person judging productivity to suggest that that either speed or alteration in working on the part of people ought to increase their work burden. If so—there are many instances—how does that person qualify for a rise? Perhaps it is something about which the Government are not concerned irrespective of how much they put up prices, taxation and the cost of living.

That is the policy of the criteria. That is what the first four paragraphs of the criteria spell out. It is the Government's intention that prices shall rise but there shall be no equivalent wage increase. That is the Government's policy in the Budget and in the criteria. Let the Minister try to deny that when he defends the criteria. He knows that that is the policy, but he does not want it put in those words. It is for that reason more than any other than I urge hon. Members to oppose these criteria.

The Government are indulging in another bout of double dealing. They are trying to tell the trade unions and industry generally that they are not working in the way spelled out by the criteria here set out. This is exactly what they have done to the busmen. They say, "We do not want this to catch you, but let us get it through", and the moment the measure is passed it is used to catch people like the busmen.

The whole basis of the Order is such that in a year's time it will have to be strengthened. We are faced with the fact that by these criteria, and by the penal sanctions which are available to them, the Government are able to control all aspects of wages, prices and investment policy. It is for that reason as much as any other that the country is now in such a sorry state and we are required to deal with this legislation in a mere 90 minutes of debate. Luckily we have been able to get an extra hour to discuss this Order. This is the way in which the Government have arranged their legislation. They can slide this Order through under the provisions of the Act. They can slide these alterations through with the minimum of debate, and without the possibility of amendment by the House. This is wrong, and I ask hon. Members to oppose this Order.

10.42 p.m.

Mr. Stanley Henig (Lancaster)

I am afraid that I am going to upset my hon. Friend the Under-Secretary who, possibly because of alliances on other issues, might have expected more support from me than he will receive. I must, rather unusually, join forces with some of my hon. Friends who normally sit on these benches, and take objection to certain aspects of the Order.

I am concerned with a slightly different aspect from those which have received most attention this evening, namely, what seems to me to be a differentiation between above the ceiling and below the ceiling settlement of wage increases. I like to think that when the Minister replies he will be able to relieve my anxieties, but I am rather inclined to doubt it.

Below the 3½ per cent. ceiling certain criteria are laid down. The most important of these is that the workers in question shall be lower paid. We have had arguments about what is a lower-paid worker. I do not intend to take much notice of what has been said from the other side of the House. Most of us on this side know what a lower-paid worker is, and know what sort of wages he receives.

A lower paid worker may apply for a rise. It is a rise justified only on the basis that he is lower paid in relation to other people, the rise will be limited to 3½ per cent. Somebody else who is able to make a genuine productivity deal—and let us accept that there is such a thing as a genuine productivity deal— may get a rise of much more than 3½ per cent. In other words, as a result of this Order the differential between a lower-paid worker and a higher-paid worker will not be reduced as we on this side want, but will be increased, because it frequently happens that those who are in a position to agree to productivity arrangements are those who, relatively speaking, are already better paid.

Let me relate that to the municipal busmen.

Mr. J. B. Symonds (Whitehaven)

Is my hon. Friend suggesting that those with higher wages should sacrifice the increased rate so that lower-paid men can get more instead of getting an equal amount?

Mr. Henig

I am arguing that the basic criteria for any incomes policy that I would like to see introduced by the Government would be in favour of a redistribution of incomes, but I am afraid that this policy may, in the way that I have indicated, not do this, but rather, penalise the lowest-paid workers.

I wanted to take briefly the simple case study of a group of people to whom the incomes policy has already been applied—the municipal busmen. There is not much doubt about the proposition that the municipal busmen are one of the lower-paid groups of workers. For a basic working week a municipal busman earns less than all sorts of other people —and much less than a London busman earns. I am not convinced that it is all that more difficult to drive in London than it is to drive along winding country lanes—

Mr. Speaker

Order. We cannot argue the differential rates between London and provincial busmen.

Mr. Henig

I accept that, Mr. Speaker—but it may be extraordinarily difficult for a municipal busman to reach any kind of agreement based on increased productivity—because if he is driving his bus the concept of increased productivity must necessarily be different from the concept of increased productivity for certain other professions. One would not want to advocate his driving his bus faster, or over the pavement if there were a traffic jam.

As for the question of one-man buses, the argument presupposes that one-man buses are available—and in the area that I represent this is not the case. It is a dangerous trend. We have reached a state of affairs when this policy, which sets out ostensibly to help the lower-paid workers, might end up by allowing only those who are not lower-paid to get these extra increases over and above the ceiling.

Secondly, it is laid down that the workers who are involved in these productivity agreements should not necessarily receive the full fruits of their increased productivity. I want to know exactly how this policy works. Does it mean that we shall measure a particular agreement and say, "This agreement will add 7½ per cent. to the productivity of this firm. The workers should take 6½ per cent., leaving 1 per cent. for redistribution round the rest of the country"? That would be fine, but I have a feeling that the workers will say, "Nonsense; that 1 per cent. will go straight into the pockets of our employers". This seems to be a muddle, and I should like my hon. Friend to explain it.

My basic reservation concerns prices. My great fear is that the introduction of this Statutory Instrument, coming on top of what has already been done, will make the Government responsible for something which, basically, they cannot control. The Government are in a position, through the National Board for Prices and Incomes or any other body, to control the prices of thousands of individual goods sold in the shops, or that the early warning system will operate.

Occasionally it is my misfortune to be sent out shopping, and in the supermarkets one finds that everything is "2d. Off This Week", or "3d. Off This Week", or that one gets a tube of toothpaste together with a mug. Many of these items have long ceased to have any basic retail price in real terms, as they affect the customer—the housewife—and an increase in the price becomes meaningless. It is certainly something that will not be registered in an office in London, but it will be registered by the housewife. Previously she was justified in blaming the manufacturer for the increase in price. Now the Government are offering a free bonus to their opponents. The housewife is now able to blame the Government for the rise in price, which situation none of us on this side of the House can accept with equanimity.

I want to take up a hint from the other side of the House about nationalised industries. If the Government are serious about keeping down prices, I would like them to start on that sector which is or should be 100 per cent. responsible to demands from the Government. I am most concerned because, over recent months, it has sometimes seemed to the public, rightly or wrongly, that, far from keeping prices down, the nationalised industries have been leading the race to raise them.

When we vote on this Order, and despite my observations, I will vote for it, which will, no doubt, surprise certain people. My fundamental objection to the Order is that it is politically misconceived. It is making a dirty word of a prices and incomes policy which we in the Labour movement want to see firmly established to make possible real redistribution of income, and it talks of Government responsibility for things which cannot be done. The political damage of this will be great. However, since the Government have resisted all our blandishments and have gone ahead, I think that the political damage would be far greater if we got it through in the most damaging way possible, with the Government having another wafer-thin majority. That is why I will, personally, support it, but I hope that my hon. Friend the Under-Sccretary—and others of my hon. Friends—will answer some of the points which I raised.

10.52 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I think that the whole House enjoyed hearing the hon. Member for Lancaster (Mr. Henig) wrestling with his conscience over what he should do in the Lobby tonight. I sympathise with his dilemma on the choice between passing the Order and ruining the Labour Party, since a return to a free market determination is clearly too much for him. I assure him that it is not such a difficult choice as he seems to make out. There is no doubt that my hon. Friend the Member for Honiton (Mr. Peter Emery) is right and that we are descending into an ever more vicious spiral as a result of this policy.

The Secretary of State "said in Committee: What we are doing here is not merely continuing existing powers but extending them in a number of very important respects which we have discussed exhaustively duing the proceedings of the Committee. We have the powers branching out in various new fields; we have the extension of the standstill for both prices and incomes; we have the power to secure reduction in prices; we have powers over rents; we have the new compulsory restraint over dividends."—[OFFICIAL REPORT,Standing Committee F, 18th June, 1968; c. 1094.] That is the glorious, positive new policy for productivity of which the Government boast so much.

I would like to compare these pious aspirations with what has happened in the case of the railwaymen. They have been awarded a settlement which, apparently, meets the Government's prices and incomes criteria, yet all that they have given in return for wage increases right up to the ceiling is a vague promise of a productivity bargain to come. Does the Under-Secretary consider that that promise of a productivity agreement comes within the terms of paragraph 34(7), the productivity paragraph, and within the repeated and endless talk by the Government about copper-bottomed productivity deals? No one thinks so.

One is tempted to remember the debate last week, when the Secretary of State argued so convincingly and vehemently that bargains could not be made enforceable. One sees immediately the Government's dilemma, because every time they come to a major settlement with the railwaymen, the busmen or the engineers, which threatens to go over the limit of the policy, they have in the end to back down because they know that it could not be made enforceable. The prospect of the Labour Party turning out the sort of proposals which Donovan put forward and which my right hon. Friends put forward as the structure of trade union law and at the same time bringing in penal sanctions leading to prison for people acting against the prices and incomes legislation is extraordinary.

There is another point about the criteria which acts flatly against Donovan —the extraordinary investigation into every detail of the settlement. If there are to be a number of settlements composed of national, regional and plant agreements, all must come within the 3½ per cent. ceiling. Every plant bargain, all the way down the line, must be investigated, reported on and, if necessary, referred to the Board. How on earth can productivity agreements and plant bargains be reached in such circumstances? The policy of Donovan which we considered last week and the policy in the criteria are moving in completely opposite directions.

I return to the speech of the hon. Member for Lancaster. I wonder whether it is worth selling the Labour Party for this mess of potage. It has been said that it might mean the saving of £200 million a year of total demand. I believe that that figure has been set far too high, but, even if it were right, it would be selling the Labour Party for a mess of potage to go through all the heat and hell of this summer, in the by-elections, the public opinion polls, fights with the trade unions and disputes leading hon. Members below the Gangway to joining forces with my hon. Friends in Division after Division, for the saving of £200 million from total demand. The total tax yield this year is about £14,000 million. We are going through all this trouble for £200 million in one year. To those who say that the Tory Party will need an incomes policy, I reply that it is clear that by being slightly more accurate in manipulating total demand we can do without such a policy altogether.

I believe that wage increases will moderate this year. They will not be as high in total as last year, not because of the policy of the criteria or because of the appalling wrangles which we have had about what is a lower paid worker and what is a productivity bargain—all these details which have been dragged before the House—but because the Chancellor increased taxation to nearly enough to cover his total expenditure. That is why wage increases will be moderated this year.

It seems extraordinary that for the tiny sum of £200 million a year, which could be saved simply by cutting out a number of civil servants and by cutting out all the nonsense which the Labour Party have introduced, for this mess of potage, the Labour Party are prepared to destroy themselves, to pull themselves to pieces. They are doing it for a policy as insane and as ridiculous as this— against which we shall vote later tonight.

10.59 p.m.

The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley)

At the beginning of his speech, the hon. Member for Worthing (Mr. Higgins) urged the House to consider that we were debating what he described as long-term prices and incomes policy. He concluded that there was some wish, perhaps even some decision, on the part of the Government to mount a statutory incomes policy as a permanent feature of our economic planning.

Let me say again what I have said from the Dispatch Box on at least three occasions, what the Prime Minister has said and what my right hon. Friend the First Secretary of State has said—what is our simple intention towards the possibility of an extension of these powers. On my part, there is certainly no enthusiasm for extending prices and incomes policy with its statutory backing —I emphasise, with its statutory backing—after the end of 1969.

I certainly do not see a statutory prices and incomes policy as a way of bringing about a planned economy or a Socialist society. I certainly do not see it as a system which is in itself desirable. I see it simply as a necessity in the present situation.

I said to the House at the end of the Second Reading debate, and I say again this evening, that whilst the Government does and must reserve the right to operate whatever policies seem to be necessary today for the extension of the economic improvement that the country has already seen, and whilst it is conceivable that that improvement might necessitate additional items of prices and incomes policy, it is the wish and the hope of the Government that a statutory prices and incomes policy should not be a permanent feature and should not be an extended feature.

The hon. Gentleman the Member for St. Albans (Mr. Goodhew), who 30 seconds ago cried "Keeping the door open", a minute ago cried" That is not the sort of thing you were saying a year ago ".

Mr. Victor Goodhew (St. Albans)

I cried the first time that that is exactly what the hon. Gentleman had been saying. A year ago, and two years ago, we heard Ministers keep saying that they did not intend to do it indefinitely, but we have had them doing it indefinitely.

Mr. Hattersley

Had the hon. Gentleman been here at the beginning of the debate he would have heard the hon. Member for Worthing say that what I said a moment ago was in absolute distinction to what my right hon. Friends said in 1966, 1967 and 1968, for the hon. Member for Worthing told the House that the Government's word—and I think I quote him verbatim—was broken time and time again.

As I understand it, the word he claimed was broken is the word, the promise, that there should not be and would not be an extension of the statutory prices and incomes policy. If he would do the House the courtesy of looking at column 429 of the Official Report on 13th July, 1967, he will find that his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) went to some pains to point out to the House that my right hon. Friend the then First Secretary, now the Foreign Secretary, had always avoided saying whether there would or would not need to be an extension of the prices and incomes policy. If he reads the next column he will see that the right hon. Member for Enfield, West goes on to say that no assurance was received from the Prime Minister either. Whatever I may have to say in criticism of the right hon. Gentleman, I do not think it is his habit to pay gratuitous compliments to his opponents. If he was saying, as he was, that both these right hon. Gentlemen had been scrupulous and careful not to give any firm promise, I hope the House will agree that they had been scrupulous and careful in their determination not to give any firm promise.

The hon. Member for Worthing went on to say that paragraph 4 of the White Paper specified that it was an obligation on the Government to obtain for its prices and incomes policy the maximum amount of agreement with industry. Of course that is right, and of course it has been done.

The criteria in the White Paper, which after all are the criteria we are discussing this evening, are identical to those which appeared in the White Paper Command 2639—identical in terms of incomes and in terms of prices. That was the original White Paper accepted in April, 1965, agreed with the C.B.I, and agreed with the T.U.C. If one goes on to extend that point, and to examine not only the criteria in the White Paper but the powers in the White Paper, let me put this to the hon. Gentleman. Certainly the T.U.C. want a prices and incomes policy; certainly the C.B.I, want a prices and incomes policy. Both want it to be statutory in part, although they each would choose different parts for the application of statutory powers. In so far as we have got a substantial measure of agreement on the criteria and on the necessity for some statutory powers, we have achieved with both sides of industry substantially greater agreement than the Conservative Government achieved for their incomes policy.

We have not had from them yet whether they would have an incomes policy, but what is certain is that the C.B.I, and the T.U.C. believe there has to be some planning in these matters. We have not heard from the hon. Member for Worthing on this or on the other occasions when I have faced him across the Despatch Box whether he believes in prices and incomes policy or not, and if he does, what he thinks the criteria should be.

It is no use coming to the House and saying that these criteria are inadequate and do not deserve the support of industry when the hon. Gentleman himself is unwilling or unable to offer the House any alternative criteria which might deserve the total support which he demands.

The hon. Gentleman went on to say that there was an absence of clarity in the policy. He referred to the 1966, 1967 and 1968 Acts. I suggest that, on reflection, he will agree that the White Paper as it stands is a simple guide both to the criteria in the policy and to the powers in the policy. The White Paper stipulates in paragraph 10 the intentions of the powers. It stipulates the powers which, when the White Paper was printed, we hoped to take by way of a new incomes Measure. A simple paragraph cannot give force to those powers. We believed that it was right that a simply worded White Paper should give a comprehensive account of the policy, and that is what it does. The complications of the 1966, 1967 and 1968 Acts do no more than give statutory force, through the normal Parliamentary processes, with all its details and difficulties, to what is set out simply and clearly in the White Paper.

Mr. Eric S. Heifer (Liverpool, Walton)

Paragraph 34 (iv) states the circumstance of there being … widespread recognition that the pay of a certain group of workers has fallen seriously out of line with the level of remuneration for similar work and needs in the national interest to be improved. That is clear and understandable. Paragraph 38, however, states: The criterion justifying increases on grounds of comparability needs to be applied selectively, and must not be used to spread pay increases into areas of employment where the original justification does not apply. Would my hon. Friend call that simple and clear? I do not understand it.

Mr. Hattersley:

I intend to deal with the criteria one by one. My hon. Friend will agree that the policy as set out in the White Paper is admirably clearer than any policy which was dependent on the examination of the Act. Hon. Gentlemen opposite have suggested that the ordinary man in the street who wanted to understand the prices and incomes policy had to refer to three Acts of Parliament, and that is not so.

I trust that hon. Gentlemen opposite know the origin of the estimate that a prices and incomes policy would reduce effective demand by 1 per cent. It was estimated that 1 per cent., or about £100 million, would be removed from effective demand. That estimate originally came from the right hon. Member for Mitcham (Mr. R. Carr) when questioned by me on Second Reading of what was then the last Prices and Incomes Bill. I asked him if he regarded the removal of per cent. or 2 per cent. of purchasing power as negligible. Earlier in that debate the right hon. Gentleman had said that all that could be expected of the incomes policy criteria as laid down was a reduction in demand of 1 per cent. or 2 per cent. If that is what the right hon. Gentleman regarded as the object of that Measure, then I regard it as the minimum object. I regard the maximum as something more positive, creative and permanent.

It was surprising to hear the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) ask, in effect, "What does it matter if £200 million is knocked off effective demand?" That shows how much the hon. Gentleman is out of touch with the views of his hon. Friends. Do I gather—the hon. Gentleman appears to be nodding his head—that the hon. Member for Worthing agrees with me?

Mr. Higgins

No.

Mr. Hattersley

In any event, it is obvious that the hon. Member for Cirencester and Tewkesbury is out of tune with the realities of the economic situation.

Mr. Higgins

The hon. Gentleman really must not put words into my mouth. Will he now answer my second point: are we to understand that the Chancellor of the Exchequer, in making his Budget judgment, included a minimum figure for the effectiveness of the incomes policy of £200 million a year?

Mr. Hattersley

No. My right hon. Friend made very clear in his Budget what he regarded as the implications of the incomes policy, and it is clearly not possible to say whether he made an estimate as precise as that. But what I say is that the minimum defined for incomes policy was stipulated by his right hon. Friend, not mine. His minimum is very worth while achieving, and if we were ever through this policy to reduce effective demand by £100 million, let alone £200 million, it would be a substantial achievement, and would justify all the pain and sweat that goes into the creation of policy.

Mr. Sheldon

Would not my hon. Friend agree that the maximum figure of half to one per cent., if it could be achieved from this incomes policy, could still be achieved through any kind of incomes policy where the Government take a view, and in which the ordinary processes of huffing and puffing would achieve this half to one per cent.?

Mr. Hattersley

My hon. Friend is asking whether I believe a statutory policy to be necessary. The difficulty of allowing interventions, which I like to do on grounds of courtesy, is that I am asked to anticipate points that I intend to make later on. This point is central to all that I have to say.

The hon. Member for Worthing said that no allowance was made for changes in demand. That was his first criticism. Without examining in detail the wages criteria, would he look at paragraph 34(2) of the White Paper, which states that … where it is essential in the national interest to secure a change in the distribution of manpower … and a pay increase would be both necessary and effective for this purpose … a wage increase would be permissible. That clearly could be done in cases of changes in demand.

Similarly, when the hon. Gentleman says that comparability as a criterion either exists or does not exist—and this is a point which answers my hon. Friend the Member for Walton (Mr. Heffer)— I say to them both that cases are not as simple as that. There are occasions when comparability is the only possible criterion which can determine an appropriate wage level, particularly in the public sector, but there are cases that can be used just as excuses for maintaining the traditional differentials, wage structures and patterns we have always had. In those circumstances the Government would be unable, and unwilling, to allow that criterion to justify a wage increase within or above the normal.

Then the hon. Gentleman asked me about the lowest paid. He said that the Government had carefully never said how the lowest paid were defined, and asked what this amounted to. My hon. Friend the Member for Derbyshire, South-East (Mr. Park) said that the Government had described the lowest paid as the chief beneficiaries of the policy. I say to him that I have never made that claim, nor, to my knowledge, has my right hon. Friend or any other member of the Government. What we have claimed is that during, an admittedly stringent pay period, during a time when we expect there to be restraints which will hit wage and salary earners hard, we are attempting to insulate from this admittedly hard policy the lowest paid. That is very different from giving them a preferential position and describing them as the beneficiaries of the policy.

Mr. Park

If my hon. Friend is now saying that the lowest paid will not be the beneficiaries of the incomes policy he is certainly saying something very different from what has been implied on many occasions, and if the lowest paid are not to be the beneficiaries of the incomes policy, who are the beneficiaries to be?

Mr. Hattersley

The answer to that is that we all are when we live in a more prosperous and healthy economy. When I used that phrase before I was winding up on the Report stage and referring to wages councils. I used the exact phrase that the lowest paid would be insulated from the admittedly hard policy. That is the sum of what I claim. I do not claim more, and I do not believe that any of my hon. or right hon. Friends have tried to claim more.

Within the general umbrella of the lowest paid, the hon. Member for Oswestry (Mr. Biffen) asked about equal pay for equal work. He asked, were we to say that women moving towards equal pay could obtain it only within the general boundary of a 3½ per cent. increase and therefore at the expense of other workers in an industry. In the short run during this phase of incomes policy, the answer is yes certainly. As we hope that on some occasions the general body of workers will make, within the 3½ per cent., special allowances for the lowest paid, we hope that some bodies of workers will make special allowances for equal pay. That must remain the criteria within the policy while this phase operates. I do not believe that even the most sanguine hon. Members opposite believe that equal pay will be achieved between now and December, 1969. My task tonight is to discuss the criteria which will apply for the next 18 months and during that period there is to be a 3½ per cent. ceiling.

The hon. Member for Worthing referred, as he always does, to the Long-bridge group of companies and the Order we once debated on that subject and the disputed area of productivity in that agreement. I have never accepted that there was a productivity agreement at Longbridge. What I assert is that the policy of the Government has encouraged rather than deterred productivity bargains. If increases are possible under productivity bargains and not under other agreements, there is bound to be an emphasis towards the former and away from the latter. All the evidence from settlements reported to my Department confirms that commercial companies, unions and employers' associations are thinking and acting in terms of productivity agreements.

This leads me inevitably to the local agreement. Nothing is new about the idea that increases obtained from local or plant agreements should be aggregated with national agreements in prices and incomes policy. For example, Cmd. Paper 3235, which dealt with policy after June, 1967, said that the criteria must apply to industry, company or plant bargains. It seems eminently reasonable that if we are asking for a 3½ per cent. ceiling it should not allow local negotiations to add 1 per cent. or 2 per cent. to that percentage.

As to the engineering agreement, I am sure that on reflection the hon. Member for Oswestry, knowing that the agreement is still being considered, will not expect me to make many detailed comments on how it should come out. He will know that most plant bargains, most local agreements concluded on top of and supplementary to an engineering national agreement are concerned with piece rates, payment for results and other things which are to do with performance and might well be considered as increases in productivity because they result in more pay for more work. Certainly when and after the national agreement has been concluded, the local agreement which will follow must be judged against the productivity criteria.

Mr. Biffen

Precisely because the negotiations are now under way, the view of the Government should be known on this highly critical point? Surely the Joint Parliamentary Secretary will realise that paragraph 32 says: In considering increases settled at national level account must be taken of probable increases at local, company and plant level. Is he telling the House that the Government cannot in their own mind assess how much of that 3½ per cent. criteria is likely to be taken up by subsequent local settlements which will follow the national engineering award, and that he is unwilling to disclose that information either to this House or to those engaged in the negotiations?

Mr. Hattersley

I am certainly not going to say now, using the hon. Gentleman's own words, arbitrarily what is the maximum figure that should be negotiated in national agreements, and it would not be in the interest of industrial relations that I should give such a figure. As a general principle, when those national negotiations are concluded, the 3½ per cent. ceiling must apply to them and any other across the board increases which are related to output and productivity negotiated locally.

The hon. Gentleman the Member for Worthing suggested, as has been suggested on many previous occasions, that somehow there is an internal conflict within the Government, perhaps an intellectual rather than a personal conflict, about the prices policy. Again, I think on reflection he will realise that the Government's policy on prices is clearly set out and absolutely consistent. In paragraph 14 of the Instrument which we are discussing we say clearly and precisely that we anticipate that, as a result of devaluation and other Government measures, there will be price increases during the forthcoming year.

My right hon. Friend the Chancellor of the Exchequer made an estimate of the price increases which would flow from his Budget and from other factors. He is the only Chancellor of the Exchequer ever to make such a precise estimate, and no one on this side of the House is pretending that Government policy—taxation policy, the decision to devalue—will not mean an increase in prices. Of course it will. But to my right hon. Friend the fact that there is likely to be an increase in prices because of devaluation and other things is not an argument for letting unnecessary price increases go forward. Indeed, it is probably the strongest argument for making sure that unnecessary price increases are prevented. All my right hon. Friend has ever claimed he would do, or could do, is to subject many price increases to scrutiny, to make sure that those price increases which are unjustified, which are unnecessary, do not go forward at a time when there is admittedly a general price increase and at a time when there has to be some restraint in wages.

My hon. Friend the Member for Salford, West (Mr. Orme) said to the House that he chose to deal with the incomes aspect of the White Paper. I wish that he had chosen to deal with some of the other aspects as well, and for this reason. I suspect that he is in general agreement with the rest of the White Paper, and I suspect that when he hears the hon. Gentleman the Member for Worthing say, "What we object to is the wish to extend these criteria to every aspect of our economic life", he agrees with me that it is absolutely appropriate that these criteria and this level of restraint should be applied to prices, should be applied to municipal rents and should be applied to dividends. I hope he also agrees that it is not unreasonable that in those sectors there needs to be a general background of statutory power to make sure that the criteria are applied as justly and as universally as we intend.

Let me say two things about the use of powers. They are not new, but they are things which the hon. Gentleman opposite either do not hear or choose not to understand. I have said many times that the application of this policy needs the support of the unions. If the unions were to rejecten masse the incomes policy, the incomes policy could not work. The statutory powers could not work if scores of trade unions and thousands of trade unionists chose to reject them. Our belief is that most trade unions will accept and have accepted the criteria. They may not agree with the policy, and may not agree with the criteria in the policy, but they believe that they have an obligation to work within it. The statutory backing of the policy is intended not to coerce the majority of trade unions into compliance, but to assure them that if they are agreeing—I leave it open as to their enthusiasm and willingness—to operate the criteria of the policy, they will not have their position prejudiced by that small minority which persistently insists on flouting the policy. The statutory powers are intended for the uncooperative minority rather than the majority who all the evidence suggests have been co-operative and will continue to be.

An Hon. Member

What about the busmen?

Mr. Hattersley

The hon. Member for Worthing accused the Government of being obsessed with wages. I believe, as do my right hon. and hon. Friends, in a high wage economy, but we happen to believe in an economy in which high wages are earned. A high wage economy, yes; but one in which wages are related to production rather than one which is simply an instrument of inflation.

To talk as if there was some inherent hypocrisy in the policy, as the hon. Member for Honiton (Mr. Emery) did, and that there is some opportunity for small employers and others to flout it is to misunderstand or simply not to know that, each day and each week, my right hon. Friend's Department receives inquiries and applications from small employers who are asking for guidance and assistance in implementing and organising the policy.

Mr. Emery

rose—

Mr. Hattersley

No—[HON. MEMBERS: "Give way."] No, I am not giving way. Only a few minutes remain to me.

Some of my hon. Friends asked me, "What about the busmen?" I was specifically asked a question about the busmen which, were it a fact, would be a grievous criticism of the policy. It was suggested that many busmen, anxious and willing to operate a productivity deal, were prevented by technical considerations in the shape of the sheer availability of one-man buses. In other words, the suggestion is that, despite their enthusiasm for the policy and their willingness to operate it, they are not allowed to do so because of these technical factors.

Nothing could be further from the truth. The opportunities offered to the municipal busmen by my right hon. Friend are very clear and precise: a 10 shilling across the board increase, and an additional 10 shillings on their agreement in principle that they will work one-man buses when they become available. They do not have to do it. They have to agree to do it. When they actually do it, their increases in wages will be very substantial.

Mr. James Hamilton

This is a very important point. My hon. Friend has said now that they are being offered a 10 shilling increase across the board, and a 10 shilling productivity increase to which they have to agree in principle. Whether or not they can operate it is conjectural, because of the fact that we do not have one-man buses. Nevertheless, if the men agree in principle to work this, they will get £1. Is that it?

Mr. Hattersley

That is correct, and for those who agree not just in principle but in practice and do operate one-man buses, there are substantial increases available to them which will take them out of any conceivable category of lowest-paid workers.

Mr. James Tinn (Cleveland)

Will my hon. Friend comment on the point made by my hon. Friend the Member for Coventry, North (Mr. Edelman) about whether, in addition to the low wage aspect of the municipal busmen, they do not come under paragraph 34(ii), which provides for a redistribution of resources and of manpower, since, manifestly, the low wages of busmen reflect—

Mr. William Whitelaw (Penrith and The Border)

rose in his place and claimed

to move, That the Question be now put.

Question put, The Question be now put: —

The House divided: Ayes 212, Noes 260.

Division No. 283.]	AYES	[11.30 p.m.
Alison, Michael (Barkston Ash)	Goodhart, Philip	Onslow, Cranley
Allason, James (Hemel Hempstead)	Goodhew, Victor	Orr, Capt. L. P. S.
Astor, John	Grant-Ferris, R.	Orr-Ewing, Sir Ian
Awdry, Daniel	Gresham Cooke, R.	Osborn, John (Hallam)
Baker, Kenneth (Acton)	Grieve, Percy	Page, Graham (Crosby)
Baker, W. H. K. (Banff)	Griffiths, Eldon (Bury St. Edmunds)	Pardoe, John
Balniel, Lord	Gurden, Harold	Peel, John
Barber, Rt. Hn. Anthony	Hall, John (Wycombe)	Percival, Ian
Batsford, Brian	Hall-Davis, A. G. F.	Peyton, John
Beamish, Col. Sir Tufton	Hamilton, Michael (Salisbury)	Pike, Miss Mervyn
Bell, Ronald	Harrison, Brian (Maldon)	Pink, R. Bonner
Bennett, Sir Frederic (Torquay)	Harrison, Col. Sir Harwood (Eye)	Pounder, Rafton
Berry, Hn. Anthony	Harvey, Sir Arthur Vere	Powell, Rt. Hn. J. Enoch
Bessell, Peter	Hawkins, Paul	Price, David (Eastleigh)
Biffen, John	Heald, Rt. Hn. Sir Lionel	Prior, J. M. L.
Birch, Rt. Hn. Nigel	Heath, Rt. Hn. Edward	Pym, Francis
Black, Sir Cyril	Heseltine, Michael	Quennell, Miss J. M.
Blaker, Peter	Higgins, Terence L.	Ramsden, Rt. Hn. James
Boardman, Tom (Leicester, S.W.)	Hill, J. E. B.	Rawlinson, Rt. Hn. Sir Peter
Body, Richard	Hirst, Geoffrey	Rhys Williams, Sir Brandon
Bossom, Sir Clive	Hogg, Rt. Hn. Quintin	Ridley, Hn. Nicholas
Boyle, Rt. Hn. Sir Edward	Holland, Philip	Ridsdale, Julian
Brinton, Sir Tatton	Hordern, Peter	Rodgers, Sir John (Sevenoaks)
Bromley-Davenport, Lt.-Col. Sir Walter	Hornby, Richard	Rossi, Hugh (Hornsey)
Brown, Sir Edward (Bath)	Howell, David (Guildford)	Royle, Anthony
Bruce-Gardyne, J.	Iremonger, T. L.	Russell, Sir Ronald
Bryan, Paul	Irvine, Bryant Godman (Rye)	Sandys, Rt. Hn. D.
Buchanan-Smith, Alick (Ansus, N&M)	Jenkin, PAtrick (Woodford)	Scott, Nicholas
Buck, Antony (Colchester)	Jennings, J. C. (Burton)	Scott-Hopkins, James
Burden, F. A.	Johnson Smith, G. (E. Grinstead)	Sharples, Richard
Campbell, B. (Oldham, W.)	Jopling, Michael	Shaw, Michael (Sc'b'gh & Whitby)
Campbell Gordon (Moray & Nairn)	Joseph, Rt. Hn. Sir Keith	Silvester, Frederick
Carlisle, Mark	Kaberry, Sir Donald	Smith, Dudley (W'wick & L'mington)
Carr, Rt. Hn. Robert	Kershaw, Anthony	Smith, John (London & W'minster)
Cary, Sir Robert	Kimball, Marcus	Speed, Keith
Chichester-Clark, R.	Kirk, Peter	Stainton, Keith
Clark, Henry	Kitson, Timothy	Steel, David (Roxburgh)
Cooke, Robert	Knight, Mrs. Jill	Stodart, Anthony
Cooper-Key Sir Neill	Lancaster, Col. C. G.	Stoddart-Scott, Col. Sir M. (Ripon)
Costain A. P.	Lane, David	Summers, Sir Spencer
Craddock, Sir Beresford (Spelthorne)	Lewis, Kenneth (Rutland)	Tapsell, Peter
Crouch David	Longden, Gilbert	Taylor, Sir Charles (Eastbourne)
Cunningham, Sir Knox	Loveys, W. H.	Taylor, Edward M.(G'gow,Cathcart)
Currie, G. B. H.	Lubbock, Eric	Teeling, Sir William
Dalkeith, Earl of	MacArthur, Ian	Temple, John M.
Dance, James	Maclean, Sir Fitzroy	Thatcher, Mrs. Margaret
Davidson, James (Aberdeenshire, W.)	McMaster, Stanley	Thorpe, Rt. Hn. Jeremy
d'Avigdor-Goldsmid, Sir Henry	Macmillan, Maurice (Farnham)	Turton, Rt. Hn. R. H.
Dean, Paul (Somerset, N.)	Maddan, Martin	van Straubenzee, W. R.
Deedes, Rt. Kn. W. F. (Ashford)	Maginnis, John E.	Vaughan-Morgan, Rt. Hn. Sir John
Digby, Simon Wingfield	Marples, Rt. Hn. Ernest	Vickers, Dame Joan
Dodds-Parker, Douglas	Marten, Neil	Waddington, David
Doughty Charles	Maude, Angus	Walker, Peter (Worcester)
Drayson, G. B.	Maudling, Rt. Hn. Reginald	Wall, Patrick
du Cann, Rt. Hn. Edward	Mawby, Ray	Walters, Dennis
Eden, Sir John	Maxwell-Hyslop, R. J.	Ward, Dame Irene
Elliot, Capt. Walter (Carshalton)	Maydon, Lt.-Cmdr. S. L. C.	Weatherill, Bernard
Elliott, R.W.(N'c'tle-upon-Tyne, N.)	Mills, Peter (Torrington)	Webster, David
Emery, Peter	Mills, Stratton (Belfast, N.)	Wells, John (Maidstone)
Errington, Sir Eric	Miscampbell, Norman	Whitelaw, Rt. Hn. William
Eyre, Reginald	Mitchell, David (Basingstoke)	Williams, Donald (Dudley)
Farr, John	Monro, Hector	Wills, Sir Gerald (Bridgwater)
Fisher, Nigel	Montgomery, Fergus	Wilson, Geoffrey (Truro)
Fletcher-Cooke, Charles	More, Jasper	Wolrige-Gordon, Patrick
Fortescue, Tim	Morgan, Geraint (Denbigh)	Woodnutt, Mark
Foster, Sir John	Morrison, Charles (Devizes)	Worsley, Marcus
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Munro-Lucas-Tooth, Sir Hugh	Wright, Esmond
Giles, Rear-Adm. Morgan	Murton, Oscar	Wylie, N. R.
Gilmour, Ian (Norfolk, C.)	Nabarro, Sir Gerald
Gilmour, Sir John (Fife, E.)	Neave, Airey	TELLERS FOR THE AYES:
Glover, Sir Douglas	Noble, Rt. Hn. Michael	Mr. Anthony Grant and
Godber, Rt. Hn. J. B.	Nott, John	Mr. Humphrey Atki
NOES
Abse, Leo	Garrett, W. E.	Marsh, Rt. Hn. Richard
Alldritt, Walter	Ginsburg, David	Mason, Rt. Hn. Roy
Allen, Scholefield	Gordon Walker, Rt. Hn. P. C.	Maxwell, Robert
Anderson, Donald	Gourlay, Harry	Mellish, Rt. Hn. Robert
Archer, Peter	Gray, Dr. Hugh (Yarmouth)	Millan, Bruce
Armstrong Ernest	Greenwood, Rt. Hn. Anthony	Mitchell, R. C. (S'th'pton, Test)
Ashley, Jack	Gregory, Arnold	Molloy, William
Atkinson, Norman (Tottenham)	Grey, Charles (Durham)	Morgan, Elystan (Cardiganshire)
Bacon, Rt. Hn. Alice	Griffiths, David (Rother Valley)	Morris, Charles R. (Openshaw)
Bagier, Gordon A. T.	Griffiths, Eddie (Brightside)	Morris, John (Aberavon)
Barnes, Michael	Griffiths, Rt. Hn. James (Llanelly)	Moyle, Roland
Barnett, Joel	Griffiths, Will (Exchange)	Murray, Albert
Baxter, William	Gunter, Rt. Hn. R. J.	Oakes, Gordon
Bence, Cyril	Hamilton, James (Bothwell)	O'Malley, Brian
Benn, Rt. Hn. Anthony Wedgwood	Hamling, William	Oram, Albert E.
Binns, John	Hannan, William	Orbach, Maurice
Bishop, E. S.	Harrison, Walter (Wakefield)	Oswald, Thomas
Blackburn, F.	Hart, Rt. Hn. Judith	Owen, Dr. David (Plymouth S'tn)
Blenkinsop, Arthur	Haseldine, Norman	Owen, Will (Morpeth)
Boardman, H. (Leigh)	Hattersley, Roy	Page, Derek (King's Lynn)
Boston, Terence	Hazell, Bert	Paget, R. T.
Bottomley, Rt. Hn. Arthur	Healey, Rt. Hn. Edward	Palmer Arthur
Boyden, James	Henig, Stanley	Pannell, Rt. Hn Charles
Braddock, Mrs. E. M.	Herbison, Rt. Hn. Margaret	Parker, John (Dagenham)
Bradley, Tom,	Hilton, W. S.	Parkyn, Brian (Bedford)
Bray, Dr. Jeremy	Hobden, Dennis (Brighton, K'town)	Pavitt, Laurence
Brooks, Edwin	Hooley, Frank	Pearson, Arthur (Pontypridd)
Broughton, Dr. A. D. D.	Howarth, Harry (Wellingborough)	Peart, Rt. Hn. Fred
Brown, Rt. Hn George (Belper)	Howell, Denis (Small Heath)	Pentland, Norman
Brown, Hugh D. (G'gow, Provan)	Hoy, James	Perry, Ernest G. (Battersea, S.)
Brown, Bob (N'c'tle-Tyne, W.)	Huckfield, Leslie	Prentice, Rt. Hn. R. E.
Brown, R. W. (Shoreditch & F'bury)	Hughes, Rt. Hn. Cledwyn (Anglesey)	Price, Christopher (Perry Bar)
Buchan, Norman	Hunter, Adam	Randall, Harry
Butler, Herbert (Hackney, C.)	Hynd, John	Rankin, John
Butler, Mrs. Joyce (Wood Green)	Irvine, Sir Arthur (Edge Hill)	Rees, Merlyn
Callaghan Rt. Hn. James	Jackson, Colin (B'h'se & Spenb'gh)	Reynolds, Rt. Hn. G. W.
Carmichael, Neil	Janner, Sir Barnett	Richard, Ivor
Carter-Jones, Lewis	Jay, Rt. Hn. Douglas	Roberts, Albert (Normanton)
Castle, Rt. Hn. Barbara	Jenkins, Rt. Hn. Roy (Stechford)	Roberts, Rt. Hn. Coronwy (Caernarvon)
Coe, Denis	Johnson, James (K' ston-on-Hull W.)	Roberts, Gwilym (Bedfordshire, S.)
Coleman, Donald	Johnson, Carol (Lewisham, S.)	Robinson, Rt. Hn. Kenneth (St. P 'c' as)
Concannon J. D.	Johnson, James (K'ston-on-Hull W.)	Robinson. W. O. J. (Walth'stow,E.)
Conlan, Bernard	Jones, Dan (Burnley)	Rodgers, William (Stockton)
Corbet, Mrs. Freda	Jones, Rt. Hn. Sir Elwyn (W.Ham,S.)	Roebuck, Roy
Crawshaw, Richard	Jones, J. Idwal (Wrexham)	Rogers, George (Kensington, N.)
Crosland Rt. Hn. Anthony	Jones, T. Alec (Rhondda, West)	Ross, Hn. William
Crossman, Rt. Hn. Richard	Judd, Frank	Rowlands, E. (Cardiff, N.)
Cullen, Mrs. Alice	Kelley, Richard	Shaw, Arnold (Ilford, S.)
Dalyell Tam	Kenyon, Clifford	Sheldon Robert
Davidson, Arthur (Accrington)	Kerr, Dr. David (W' worth, Central)	Shore, Rt. Hn. Peter (Stepney)
Davies, Ednyfed Hudson (Conway)	Lawson, George	Short,Rt.Hn.Edward(N'c'tle-u-Tyne)
Davies, G. Elfed (Rhondda, E.)	Leadbitter, Ted	Silkin, Rt. Hn. John (Deptford)
Davies Dr. Ernest (Stretford)	Lee, Rt. Hn. Frederick (Newton)	Silkin, Hn. S. C. (Dulwich)
Davies' Harold (Leek)	Lee, Rt. Hn. Jennie (Cannock)	Skeffington, Arthur
Davies, Ifor (Gower)	Lee, John (Reading)	Slater, Joseph
Dell, Edmund	Lestor, Miss Joan	Small, William
Dempsey, James	Lever, Harold (Cheetham)	Snow, Julian
Dewar, Donald	Lever, L. M. (Ardwick)	Spriggs, Leslie
Diamond, Rt. Hn. John	Lomas, Kenneth	Steel, Thomas (Dunbartonshire, W.)
Dobson, Ray	Loughlin, Charles	Stewart, Rt. Hn. Michael
Doig, Peter	Luard, Evan	Stonehouse, Rt. Hn. John
Dunn, James A.	Lubbock, Eric	Strauss, Rt. Hn. G.R.
Dunnett, Jack	Lyon, Alexander W. (York)	Summerskill, Hn. Dr. Shirley
Dunwoody, Mrs. Gwyneth (Exeter)	Lyons, Edward (Bradford, E.)	Swingler, Stephen
Dunwoody, Dr. John (F'th & C'b'e)	Mabon, Dr. J. Dickson	Symonds, J. B.
Eadie, Alex	McBride, Neil	Taverne, Dick
Edelman, Maurice	McCann, John	Thomas, Rt. Hn. George
Edwards, Robert (Bilston)	MacColl, James	Thomson, Rt. Hn. George
Edwards, William (Merioneth)	MacDermot, Niall	Tinn, James
English, Michael	Macdonald, A. H.	Tuck, Raphael
Ennals, David	McGuire, Michael	Urwin, T. W
Ensor, David	McKay, Mrs. Margaret	Varley, Eric G.
Evans, loan L. (Birm'h'm, Yardley)	Mackenzie, Gregor (Rutherglen)	Waddington, David
Faulds, Andrew	Mackie, John	Wainwright, Edwin (Dearne Valley)
Fernyhough, E.	Mackintosh, John P.	Walker, Harold (Doncaster)
Foley, Maurice	Maclennan, Robert	Wallace, George
Foot, Rt. Hn. Sir Dingle (Ipswich)	McMillan, Tom (Glasgow, C.)	Watkins David (Consett)
Ford, Ben	McNamara, J. Kevin	Watkins, Tudor (Brecon & Radnor)
Forrester, John	Mahon, Peter (Preston, S.)	Weitzman, David
Fowler, Gerry	Mallalieu, J.P.W.(Huddersfield,E.)	Wellbeloved, James
Fraser, John (Norwood)	Manuel, Archie	Wells, William (Walsall, N.)
Freeson, Reginald	Marks, Kenneth	Whitaker, Ben
Gardner, Tony	Marquand, David

White, Mrs. Eirene	Williams, Mrs. Shirley (Hitchin)	Woof, Robert
Whitlock, William	Williams, W. T. (Warrington)	Wyatt, Woodrow
Wilkins, W. A.	Willis, Rt. Hn. George	Yates, Victor
Willey, Rt. Hn. Frederick	Wilson, Rt. Hn. Harold (Huyton)
Williams, Alan (Swansea, W.)	Wilson, William (Coventry, S.)	TELLERS FOR THE NOES:
Williams, Clifford (Abertillery)	Woodburn, Rt. Hn. A.	Mr. Joseph Harper and
		Mr. Alan Fitch.

It being after one and half hours after Ten o'clock, the debate stood adjourned.

Sir Douglas Glover (Ormskirk)

On a point of order, Mr. Speaker. May I ask your protection of the rights of the House. It seems to me that by a subterfuge the Government have taken away the right of the House to reach a decision on a matter of some importance— whether the Prices and Incomes Order should remain in operation or should be withdrawn. If this can happen tonight it can happen on any subsequent Order debated in the House, which would mean that the Opposition's rights had almost been taken away. Therefore, would you accept a vote on the Motion we have just had before we proceed to further business?

Mr. Speaker

First of all—

Mr. Ronald Bell (Buckinghamshire, South)

rose—

Mr. Speaker

Perhaps when I have dealt with the point of order the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) will decide that he does not wish to pursue the point.

First, I cannot make any political comment. The last thing Mr. Speaker will do in the Chair is to express an opinion of the behaviour of either side of the House politically.

The position is that the Orders of the Day made provision for this Motion to be taken until half-past eleven. We have passed that time now. It is impossible to accede to the hon. Gentleman's request.

Mr. Ronald Bell

Since the House has impliedly resolved that the matter has not been sufficiently debated, will you, Mr. Speaker, adjourn the debate under the Standing Order?

Mr. Speaker

The Standing Order to which the hon. and learned Member refers does not bite on this occasion. We now come—

Mr. Edward Heath (Bexley)

Further to the point of order, Mr. Speaker. I submit to you that a point of some considerable importance is involved on which, if you cannot give us a decision, at least the Leader of the House can advise the House. What we were originally to discuss was a Prayer, and there has long been a tradition in the House that if the Opposition wished to put down a Prayer to an Order they could do so within the limited praying time. On this occasion the Government refused Her Majesty's Opposition this right. We acquiesced in this because we were assured that time would be given for a debate. When we accepted that arrangement we in no way believed that we should not be given an opportunity of reaching a decision on the matter at issue itself.

Surely the House is owed an explanation by the Leader of the House as to why Her Majesty's Opposition cannot have that right that we have had ever since the institution of Prayers. If the Leader of the House persists in the conduct of the Government tonight, it means that in future the Opposition can never accept a postponement of a debate on an Order in the form of a Prayer in order to accommodate the Government by having a debate in the time we have been given.

I must, therefore, give the Leader of the House notice that unless he can assure us that in future we shall have the opportunity of reaching a decision on the matter and unless he gives us this opportunity on the present Order on another occasion, we shall always have to decline to postpone the right to have a Prayer. We shall have to insist upon it.

The Lord Privy Seal and Leader of the House of Commons (Mr. Fred Peart)

I hope—[Interruption.]

Mr. Speaker

Order. Let us hear what the right hon. Gentleman has to say in reply. We want to hear both sides.

Mr. Peart

There has been a debate in which the right hon. Gentleman has put his point. I should be only too pleased to discuss it with his colleagues through the usual channels. If the right hon. Gentleman wishes to have further time, I think it is a perfectly sensible request, and I will certainly look at it.